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| DATE: | November 5, 2013 (Date of publication) |
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| Click here to download the judgement (prakash_house_property_update.pdf) |
Law of jurisdictional High Court is not binding if there is a later contrary judgement of non-jurisdictional High Court. S. 22: Property used by firm in which assessee-owner is partner is not used for assessee’s business & not entitled for exemption
The assessee, a partner in a firm, was the owner of a house property. He claimed that the house property was used by the employees of a firm in which he was a partner and that it should be considered to have been used for a business carried on by him. The assessee relied on CIT v/s. Rasiklal Balabhai 119 ITR 303 (Guj) where it was held that the annual letting value (ALV) of a godown owned by the assessee and used for the business carried on by him in partnership was not liable to be included in his total income u/s 22. However, the AO & CIT(A) relied on the contrary judgement in Prodip Kumar Bothra 244 CTR 366 (Cal) where it was held that house property income is not taxable only if the property is used for the assessee’s one’s own business and is not exempt if used for the business of the firm in which the assessee is a partner. On appeal by the assessee to the Tribunal HELD dismissing the appeal:
(i) Though the jurisdictional High Court in Rasiklal Balabhai 119 ITR 303 held that the annual letting value of house property owned by the assessee and used for the business carried on by him in partnership was not liable to be included in his total income u/s 22, the Calcutta High Court has dissented from this view in Prodip Kumar Bothra 244 CTR 366 and held that the exemption in respect of house property cannot be allowed to assessee if the property is used by the partnership firm because the owner of the house property and the occupier of the property must be the same person. The Karnataka High Court in K.N. Guruswamy 146 ITR 34 (Kar) and the Allahabad High Court in Shiv Mohan Lal 202 ITR 60 (All) & Mustafa Khan 276 ITR 602 (All) has taken the same view as the Calcutta High Court that user by a partnership firm/ HUF is not user by the assessee-owner for business purposes. In view of the divergent views expressed by the High Courts, the thumb rule that the latest decision of the High Court is required to be followed to maintain judicial discipline. As the judgement of the (jurisdictional) Gujarat High Court is earlier in point of time and the judgement of the (non-jurisdictional) Calcutta and other High Courts is later in point of time, the view expressed by the Revenue Authorities has to be affirmed and the assessee’s ground dismissed;
(ii) Also, a litigant, especially the learned counsel, who is an expert, is expected to place before the Court all decisions either in favour or against him. We are constrained to note that this fair approach was not adopted in this case.
Good
The best thing about this state of affairs is that you can’t go any higher (or lower) than that. All the best to the ITAT and its able administration.
Can learned reader’s throw some light on who invented this thumb rule about later Non Jurisdictional High Court overruling the Jurisdictional High Court judgements ? What is the correct Legal position on this issue ?
Can thumb rules override judicial precedents ? If not, what can be done ?
Impromptu
The view the itat has taken, is prima facie strikingly odd; and is not readily reconcilable with the view taken in the past in a overwhelmingly majority of court cases, – among others, by the cited Bombay HC. For an intelligent insight and perceptive understanding of the long history of the development of the governing principles, it might not but be worthwhile to have a fresh look or a re-look at the expert commentary and the series of case law cited in Palkhivala’s Text Book on the topic of “PRECEDENTS” (pgs. 36-44, Vol I, Ninth Edition).
Be that as it may, despite the events in the past, particularly in the recent couple of decades, there has been a growing feeling of discontent and hoarse outcry, even in professional circles. In that, founded on a rational thinking and sound logic, the opinion has been increasingly strengthening against the alarming proliferation of court litigation, with the inevitable and unpalatable consequences of reprehensible delay in adjudication and the resultant delivery of justice. Pushing aside the underlying wisdom in the age-old belief that, – justice delayed is (nothing but) justice denied.
Nonetheless, thanks to the recalcitrant disposition of so called ‘vested interests’, calling the shots, more so because of the apathy of the men in governance from to time, the agony of the real stakeholders, mostly the taxpayers, has been pushed back , kept alive and continued to stay, forever, to eternity, if not beyond. In the context, predominantly comes to one’s mind the laudable idea of setting up of a ‘national tribunal’; once upon a time mooted , also was being canvassed for initially with all enthusiasm, but eventually been allowed to remain in oblivion, -not to take to its wings.
Most certainly, tax law experts at large and active in the field, if so minded, could help out, and show a way for a purposeful reform and transformation- though not for retribution, – for the common good.
@ vswami: thanks
As for the NTT, I think ‘vested interests’ are wasting their time. The safest method of killing that idea is to let the NTT be set up but borrow the top management of so called mother Tribunal to run it. Trust me, greatest admirers of the NTT idea will beg for closing down the NTT.
Taylors’s time and motion study and Drucker’s management by objectives pale into insignificance when contrasted by your mother Tribunal’s management by idling and time pass.
@ Patel :Are you kidding ?
You cannot give your full (or maybe real) name and you expect others to come out and state the plain truth about a judicial stand taken by a sitting officer. Is that done ?
As pointed out, of course, in the eminent opinion of SED, the learned Senior Advocate,- “it is not the duty of the lawyer to cite decisions rendered by other Courts which are not binding.”
With due/the utmost respect, however, one may wish to put across , in brief, own but independent viewpoints, with a different stroke, for the purpose of provoking an in-depth deliberation and healthy debate by the legal fraternity: 1) Is the correctness of the stated proposition itself so sacrosanct as not questionable, or taken to be of universal application, to be followed,- if one were to go deep into / keep in the backdrop the very fundamentals/ core thinking underlying the principles enunciated by courts on the aspect of “binding nature” of any ‘precedent’ ? – For , is not, after all, the most fundamental / core of it all is that , – the court , in adjudicating on any point of dispute, should necessarily have regard to /keep in focus ,and fully and consciously take into consideration, both possible and extant views, so that it is ensured that the judicial opinion as finally rendered cannot be faulted to be not a ‘balanced’ one in its profoundly legal sense ! 2) As is expected to be known, every decision requires to be founded on the facts and circumstances of a given case; and wholly grounded on the so-called ‘factual matrix’ thereof. If so, is it not a better view that, having regard to the relevance and importance of the duty counsel of either side owes to the adjudicating authority /court, , in preference/preponderance to that he owes to client /Revenue, may be justified in holding back any contra court view , only if the factual matrix of the given case is truly distinguishable.
< No matter, quite likely, the above reactions would be brushed aside as a puritanical outburst !
(Left unedited-in the hope that the comments as posted should nonetheless suffice for the eminent and duly equipped law experts at large to , if so inclined / minded, accord some independent thinking, with the objective of bringing about a change for helping in a proper administration of justice)
in my humble opinion, one should refrain from making personal comments