TaxTMI 
TaxTMI 
TaxTMI 
2011 (1) TMI 889
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....mber-IV, Nariman Point, Mumbai. He had let out these premises in the relevant assessment years to five tenants. Lease agreements were entered into in this behalf wherein rent to be received by the assessee from those tenants was specified. The tenancies became operative with effect from October, 1992. Rent was, thus, contractual rent mutually agreed upon. However, dispute arose about payment of said rent. The said premises are in a multi-storied building and maintenance charges are payable by the occupier to the agency/builder maintaining the building. The tenants claimed that the rent payable by them to the assessee included maintenance charges and therefore, it was the obligation of the assessee to pay the maintenance charges. The assessee, on the other hand, wanted these tenants to pay the maintenance charges exclusive of contractual rent. Because of this dispute, the tenants filed a suit in Small Causes Court for fixation of standard rent. In that case, the Small Causes Court passed an interim order in 1994 fixing the rent at Rs.30,000/- per month, which was less than the contractual rent agreed upon between the parties in the rent agreement. Since the rent was fixed on lump su....
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....is receipt notice under Section 148 for the relevant years had already been issued. Coming back to the re-assessment qua assessment year 1996-97 to 1999-2000, the assessee challenged the order of the Assessing Officer by filing appeal which was allowed by CIT(A) and the re-assessment was set aside. The Tribunal by impugned order has confirmed the order of the CIT(A). According to the Tribunal, even when the contractual rent was higher, because of the interim order of the Small Causes Court passed under Section 11(5) of the Act, which was a special enactment, the assessee was forced to accept lesser rent as fixed thereby. There was no provision of appeal and thus, the assessee had no option but to receive that rent. Therefore, this became the rent receivable as per the provisions of Section 23 of the Act and was rightly made the basis of fixing the ALV while passing the original assessment orders. While doing so, the Tribunal concurred with the view taken by the CIT(A) that arrears of rent had become payable to the assessee pursuant to the final order passed by the court in the accounting year relevant to the assessment year 2000-01, which could not be taxed in the assessment year 1....
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....me as well. It is for this reason that this judgment of the Calcutta High Court becomes relevant for our purposes. The Court answered the aforesaid aspect as under:- The question is whether the arrears of rent relating to another previous year are taxable as income from house property of the later previous year in which they were received. If the arrears of rent of past years are not part of the annual rent of the year of account in which such arrears are received, then the only rational inference should be that the annual rent or annual rents of the past year or years to which they pertain can be brought to charge only in the assessment years relevant to such past years of account. The receipt of arrears of rent cannot, by any stretch of imagination, be said to have shed their character as rent from property and to have ceased to be liable to tax as income from house property. The simple case is that the rent of a past year increased retrospectively shall be the annual rent of such past year or years but not the annual rent of the year in which it is received consequent upon subsequent increase. 9. This judgment was followed by the same High Court in Hope (India) Ltd. v. CIT, 23....
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....ce of one's work, business, lands or investments (considered in reference to its amount and commonly expressed in terms of money) ; annual or periodical receipts accruing to a person or corporation' (Oxford Dictionary). The word clearly implies the ideal of receipt, actual or constructive. The policy of the Act is to make the amount taxable when it is paid or received either actually or constructively. Accrue', arises' and is received' are three distinct terms. So far as receiving of income is concerned there can be no difficulty; it conveys a clear and definite meaning, and I can think of no expression which makes its meaning plainer than the word receiving' itself. The words accrue' and arise' also are not defined in the Act. The ordinary dictionary meanings of these words have got to be taken as the meanings attaching to them. Accruing' is synonymous with arising' in the sense of springing as a natural growth or result. The three expressions accrues', arises' and is received' having been used in the section, strictly speaking accrues' should not be taken as synonymous with arises' but in the distinct sense of growing up by way of addition or increase or as an accession or advant....
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....ndia or accrues or arises outside India during the previous year. An agreement entered into between the parties in terms whereof the quantum of rent is determined with retrospective effect, in our considered view, does not come within the purview of any of the provisions of section 5 aforementioned. 11. At this juncture, we would also like to refer to an order passed by the Authority for Advance Rulings (AAR) in Jagtar Singh Purewal v. Commissioner of Income-Tax, Jalandhar (Punjab), 213 ITR 512. That was also a case where arrears of rent were received in subsequent years and AAR ruled that these were neither assessable under Section 23 nor assessable as income from other sources. The AAR had followed the judgment of Calcutta High Court in Hamilton & Co. Pvt. Ltd. (supra) while coming to this conclusion. In fact, there may not be any necessity to even take note of these judgments as amendment made in the Income-tax Act by Finance Bill 2000 with the insertion of Section 25B of the Act would clinch the issue. Section 25B reads as under:- 25B. Special provision of arrears or rent received.Where the assessee (a) is the owner of any property consisting of any buildings or ....