Dismissing the appeal of the revenue the Court held that, arrears of rent accruing in a prior years, not received in those years, could not be assessed in a subsequent year when same was received as ‘income from house property. Arrears of rent attributable to preceding years. Arrear of rent attributable to preceding years could not be brought to tax in previous year in which they were actually received under head ‘income from other sources. Provision of section 25B inserted by Finance Act, 2000 w.e.f. 1-4-2001 enabling taxation of income received from house property relatable to a prior year in year of its receipt is applicable prospectively. (Arising from Punalur Paper Mills Ltd. v ITO (2009) 29 SOT 449 (Cochin) (Trib.) (ITA Nos. 1378 to 1423 of 2019 dt 7 -02 -2019) (AY. 1985 -86, 1996 -97 to 2000-01)
CIT v. Punalur Paper Mills Ltd. (2020) 268 Taxman 47 (Ker.) (HC)
S. 23 : Income from house property-Annual value–Arrears of rent – Arrears of rent accruing in a prior years, not received in those years, could not be assessed in a subsequent year when same were received as income from house property-Arrears of rent attributable to preceding years cannot be brought to tax under the head income from other sources-Provision of section 25B inserted by Finance Act, 2000 with effect from 1-4-2001 would apply prospectively. [S. 22, 25B, 56]