Calcutta High Court
Commissioner Of Income-Tax vs Supreme Credit Corporation Ltd. on 28 November, 1997
Equivalent citations: [1998]230ITR700(CAL)
JUDGMENT
1. The following question has been referred for our opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the income from the leasehold property should be assessed as income from 'house property' and not from 'other sources' ?"
2. The point indeed is very simple. Under Section 22 of the Income-tax Act the value of the property which is chargeable to income-tax shall be chargeable to income-tax under the head "Income from house property", if the assessee is the owner of the property. The admitted facts in this case was that the assessee was the lessee of the property at 302A, Rabindra Sarani, Calcutta, which was leased out to it by one Jai Durga Investment Company, its owner, for a period of 80 years. The lessee had the option to build or rebuild the structure over the leased land and also had the right to demolish the existing structure. Relying upon the judgment of this court in Ballygunge Bank Ltd. v. CIT [1946] 14 ITR 409, the Tribunal has held that on the true interpretation of the terms and conditions of the lease deed, the assessee could be held to be the owner of the property and thus falling within the purview of Section 22 of the Act since it had the right to demolish the structure over the land and to raise new construction thereon.
3. Earlier the assessee's claim under Section 22 was rejected by the Assessing Officer and the Commissioner of Income-tax (Appeals) on the ground that the assessee was only the lessee of the property and not its owner.
4. We find that the Tribunal's findings treating the assessee as the owner by applying the ratio in the judgment of this court in Ballygunge Bank Ltd. v. CIT [1946] 14 ITR 409 is not correct by making applicable to the facts of the present case the aforesaid judgment, because in that case the lessee had the right to raise new construction over the leasehold property and in exercise of such right he had actually raised the new construction and was getting income from such new construction.
5. This court in that case had held that since the structure was raised by the lessee, it could be considered the property of the lessee and thus he could be deemed to be the owner under Section 22 of the Act. That judgment is wholly distinguishable since in the present case the lessee had not at all alleged that he had raised any construction over the leasehold property and that he was deriving income from such newly raised construction.
6. In fact, it was not the case of the assessee at all that he was deriving income from any structure that he had raised over the leasehold property by virtue of the right given to him under the lease agreement. Admittedly, the lessee was claiming the benefit under Section 22 of the Act from the income derived from the house of the leasehold property as it was let out to him by the lessor, without raising any structure thereupon.
7. In that view of the matter, we hold that by no stretch of imagination could the assessee be termed as the owner of the property since, for all intents and purposes he continued to be the lessee.
8. The question is accordingly answered in the negative and in favour of the Revenue.