| COURT: | Supreme Court |
| CORAM: | Prafulla C. Pant J, Ranjan Gogoi J |
| SECTION(S): | 147, 148, 5 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | Accrual of income, Reopening |
| COUNSEL: | S. Ganesh |
| DATE: | April 19, 2016 (Date of pronouncement) |
| DATE: | May 7, 2016 (Date of publication) |
| AY: | 1989-90 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 5/ 147: Even if income by way of rent is enhanced with retrospective effect, it accrues only when a right to receive the income is vested in the assessee. A notice u/s 148 seeking to assessee the income prior to its accrual is without jurisdiction | |
The income in question being income from house property is liable to be computed in accordance with the provision of Sections 22 and 23 of the Act. The premises belonging to the appellant was let out on rent to the Government of India. The rent was enhanced from Rs.4.00 to Rs.8.11 per sq.ft. per month effective from 01.09.1987. The said enhancement of rent was made by a letter dated 29.03.1994 of the Estate Manager of the Government of India. The said letter makes it clear that the enhancement was subject to conditions including execution of a fresh lease agreement and communication of acceptance of the conditions incorporated therein. Such acceptance was communicated by the appellant by letter dated 30.03.1994. The assessee challenged the notice issued u/s 148 to reopen the assessment on the ground that having regard to the provisions of Section 5, 22 and 23 of the Act and the decision of this Court in ‘E.D. Sassoon & Company Ltd. And Others vs. Commissioner of Income-Tax’, (1954) 26 ITR 27, no income accrued or arose and no annual value which is taxable under Sections 22 and 23 of the Act was received or receivable by the assessee at any point of time during the previous year corresponding to the assessment year 1989-1990. Hence, it was contended the impugned notice seeking to reopen the assessment in question is without jurisdiction or authority of law. HELD by the Supreme Court upholding the contention:
(i) A reading of the decision of this Court in E.D. Sassoon (supra) would go to show that the income to be chargeable to tax must accrue or arise at any point of time during the previous year. This Court in E.D. Sassoon (supra) has held in categorical terms that income can be said to have accrued or arisen only when a right to receive the amount in question is vested in the appellant-assessee.
(ii) Viewed from the aforesaid perspective, it is clear that no such right to receive the rent accrued to the assessee at any point of time during the assessment year in question, inasmuch as such enhancement though with retrospective effect, was made only in the year 1994. The contention of the Revenue that the enhancement was with retrospective effect, in our considered view, does not alter the situation as retrospectivity is with regard to the right to receive rent with effect from an anterior date. The right, however, came to be vested only in the year 1994.
(iii) In the light of the foregoing discussions, it has to be held that the notice seeking to reopen the assessment for the assessment year 1989-1990 is without jurisdiction and authority of law. The said notice, therefore, is liable to be interfered with and the order of the High Court set aside.
i do not understand like the revenue how high court failed in logic, very sad, it might mean, the over load in the High court might have played havoc or the judge was not in a right frame of mind – in such case the judge could have waited for a few more days to conclude his order, by giving a benefit of doubt advantage on his competence; anyway the standards of judgments need or ought to be balanced by patient inquiry in one’s own mind – there was obvious haste is clear might be for reducing backlog, that is a wrong strategy for any worthy offices.
I have to say of late patience in people is at very low levels, okay if it doesn’t affect any massively by a great failure of natural justice paradigm organized in the Art 14; here the basic failure starts from fits and starts work on the desk of the AOs concerned; if any AO lacks patience in his studies of assessments, such AOs should not be in charge of assessments is my considered view, for his impatience just caused wastage of executive time as also affected the exchequer taxed funds unnecessarily over taxed the exchequer i=on the one side;besides affected the tax payers pristine funds, unnecessarily charged by litigation fees besides their executive time; if the government fails to take cognizance of the ‘casual approaches of AOs or the revenue, hon court necessarily see they govt is fined under vicarious liability paradigm principle; and also compensated the tax payers’ time and the cost of their funds unnecessarily charged by the litigation is my considered view, thnx.
i find same defect is there in your itat.com employees, who simply misread perhaps of poor knowledge i suppose your employee sitting at the computer seems fail to understand the difference between the words ‘duplicate comment’ i am very sad; i need to think whether worth spending time on yr itat.com at all dr sivaram . regards.
I think and believe that the practice continues to get the price of fees . Cost at Supreme Court of India is very higher than….. lower level.May be just to avoid the Lower litigation by……… This reminds me of my own case , Criminal wherein High Court Level , without refering to the file of Appeal , wherein Case papers filed are required to be filed. On that record was there in application that Hon. High Court had passed stay over the implementation of order of C L B , V M Modi V State of Gujarat. Ignoring the facts on record , whatever spoke by Advocate was taken as granted and written in the order . I was not allowed to speak even a word !!! Hon. Justice J M panchal showed me his hands to sit down??? This is the position of Part In Person. After several years I filed Misc Criminal Application for rectification of error mistake. Rejected . But in the order Written as it is not the fact that hid a material facts of Hon. High Court has granted stay over the Implementation of the ordr of C L B. To challenge this dismissal order I had to go to Hon. SUpreme Court which is the only way?? To spend more than Rs1,00,000???? Not only this but in the case Hon High Court also passed the stay against the provisions of the Companies Act 1956 Section 111 (9) . The words used by Hon. Justice Mr J M Panchal worth noting. When nothing had been put an evidence , proof , documents to write such use of Bad Words, on record of Judgment. SUch practice should be restricted by Hon. SUpreme Court under supervision to take Justice on act .