Law: Income Tax Act, 1961

Section: 22,56

Income-tax--Other sources---Property---Income from property or from other sources--­Assessee, occupying land as non-agricultural tenant---Factory shed constructed on land and rent paid to assessee---Rent was assessable as income from other sources---Indian Income Tax Act, 1961, Ss.22 & 56. A deed of settlement was executed in 1951 by A. Under the deed A made his only son, S, a trustee and also made provision for the, maintenance of his daughter and grand-daughter. After defraying expenses, S was allowed to enjoy the estate as absolute owner thereof till his lifetime. Thereafter, the property would vest in his grandson, SK. The assessee was the daughter of S. She was in possession of part of the land as a non-agricultural tenant Initially, the assessee was paying ground rent of Rs.150 per month for this land and on January 8, 1977, she entered into an agreement with SK, her brother, according to which she let out the land to him at Rs.1,800 per month with effect from January 1 , 1978, and SK, constructed a factory-shed on this land at a cost of Rs.80,000 and after adjusting Rs.800 per month towards cost of the factory shed he paid the balance of Rs.1,000 per month to the assessee. Thereafter, the rent was enhanced in the year 1981-82 and then in the year 1984-85. As per the assessee, she received Rs.24,000 as gross rent from SK. In the return, she claimed this as income from "the house property" and also claimed deduction there from. The Income-tax Officer did not accept the assessee's claim and assessed the income as income from other sources. This was upheld by the Tribunal. On a reference: Held, that mere possession did not confer any right of ownership on the assessee. No evidence was adduced to show that the assessee was the owner of the property. The rental income was not assessable as income from house property. It was assessable as income from other sources. THIS JUDGMENT DELIVERED BY On the reference application the Tribunal has referred the following question under section 256(1) of the Income Tax Act, 1961, set out at page 7 of the statement of case for our opinion: "Whether, on the facts and in the circumstances of the case, the rent received by…

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