Law: Income Tax Act, 1961

Section: 256

Income-tax----Business---Income from business ---Assessee not owner but a lessee of property---Property sub-leased to one S---S putting up further construction on property ---Assessee not incurring any expenditure for construction ---Assessee not owner of property---On 30-9-1977 S transferring the property to assessee for consideration---Rent received by S from 1-10-1977---Rental income not taxable in the hands of assessee from 1-10-1970 to 30-9-1977, that is, till date of retransfer to assessee--­Indian Income Tax Act, 1961. The Income-tax Officer held that the income from leasehold property which was sub-leased to one S was liable to be taxed in the hands of the assessee as income from house property. The Tribunal took the view that the income was liable to be assessed as business income. On a reference, it was held that the assessee was not the owner but only a lessee and, therefore, the income from the leasehold property which was in the possession and occupation of S was the business income of the assessee. On appeal the Supreme Court in CIT v. Park Hotel (P.) Ltd. (1996) 218 ITR 221 set aside the order of the High Court and the matter was remitted to the High Court for fresh disposal. The High Court called for a finding from the Tribunal- as to who constructed the building for the purpose of ownership. The Tribunal found as per the balance-sheet of the assessee-company for the year ending March 31, 1971, that the entire immovable property stood transferred to S for consideration for the period October 1, 1970, to September 30, 1977, S had put up construction and the assessee did not incur any expenditure for the same. On September 30, 1977, the entire leasehold land alongwith construction stood retransferred to the assessee-company for consideration. Held, that since the property was sub-leased and the possession handed over to S and since S put up the construction of the multi­storeyed building and was collecting the rent the income could not be assessed in the hands of the assessee up to the date when the property was retransferred to the assessee. If income has not been taxed in the hands of .A who was liable to pay tax it could not be taxed in the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492