Law: Income Tax Act, 1961

Section: 56,56(1),14

Income-tax--Other sources---Scope of S.56--Rental income from house property--­Construction completed during previous year---Rental income only for 10 months---Not covered by expression "annual value" ---Rental income assessable as income from "other sources "---Indian Income Tax Act, 1961, S.56. Under section 56(1) of the Income Tax Act, 1961, income of every kind which is not to be excluded from the total income under the Act shall be chargeable to income-tax under the head "Income from other sources", if it is not chargeable to income-tax under any of the other heads specified in section 14, Items A to E. The assessee completed construction of his house property in the previous year relevant to the assessment year 1983-84 and since the same was in existence for a period of ten months only the rent received was for a period of ten months. The assessee claimed that since the "annual value" represents rent for one whole year and since the property was in existence, for less than one year the rental income was not taxable. The Income-tax Officer rejected the plea but the Tribunal held that it was assessable-under the head "Other sources". On a reference: Held, that since the rental income was not exempted it had to be brought within the net of tax and hence it was chargeable under the head "Other sources". Emil Webber v. CIT (1993) 200 ITR 483 (SC) applied. CIT v. Kaithikeyan (G.R.) (1993) 201 ITR 866 (SC); CIT v. Sidhwa (T.P.) (Smt.) (1982) 133 ITR 840 (Bom.); Eisner v. Macomber (1919) 252 US 189; Maharajkumar Gopal Saran Narain Singh'v. CIT (1935) 3 ITR 237 (PC); Merchants' Loan and Trust Co. v. Smietanka (1920) 255 US 509; Nalikant Ambalal Mody v. S.A.L. Narayan Row, CIT (1966) 61 ITR 428 (SC); Navinchandra Mafatlal v. CIT (1954) 26 ITR 758 (SC); Raja Bahadur Kamakshya Narain Singh of Ramgarh v. CIT (1943) 11 ITR 513 (PC) Resch v. Federal Commissioner of Taxation (1943) 66 CLR 198 and United States of America v. Stewart (1940) 311 US 60 ref. JUDGMENT ARIJIT PASAYAT, C.J.---At the instance of the assessee, the following question has been referred for opinion of the Court by the Income-­tax Appellate Tribunal, Cochin Bench (in short "the Tribunal"), in terms of…

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