AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
1945 (9) TMI 1
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....the bungalow but none others. 3. It was urged by the trustees, who were assessed as an association of persons for the assessment year 1942-43, that, in view of the aforementioned provision in the will, the trustees cannot be said to have realised any income whatever from the property in question which could be computed under Section 9 of the Income-tax Act. The claim was rejected by the Income-tax Officer and the income from the said house property was computed on the bona fide annual value basis under Section 9 and included in the assessment. 4. On appeal the Appellate Assistant Commissioner held that no income was actually received from the bungalow which was liable to tax under Section 9 and consequently directed the exclusion of the aforementioned item from the calculation of the assessee's property income. 5. The Income-tax Officer appealed to the Tribunal against the Appellate Assistant Commissioner's order and the Tribunal held upon the facts stated above that the mere circumstance that in pursuance of a certain arrangement no rent is to be charged from the occupants of the property does not render the property or the income thereof exempt from assessment un....
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....nd grandchildren as may be invited shall alone have the right to reside and besides them none others shall be allowed to reside." In pursuance of that provision, the parties named in the clause occupied the Warden Road property for the assessment year 1942-43. The trustees were sought to be assessed under the head of "income from property" in respect of this Warden Road bungalow. It was contended on their behalf that the trustees cannot be said to have realized any income whatsoever from the property in question which could be computed under Section 9, and, therefore, they were not liable to pay any income-tax in respect of this Warden Road property. The Income-tax Officer rejected that contention of the trustees but on appeal they succeeded before the Assistant Commissioner of Income- tax. The taxing authorities took the matter up to the Income-tax Appellate Tribunal and the Tribunal restored the order of the Income- tax Officer. The present reference is made at the instance of the trustees. The question submitted for the Court's consideration is in these terms:- "Whether upon the facts ....
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....hat is the total income, the Court must look at Sections 6 and 9 which contain the heads of income and how computation was to be made in respect of the head "income from property." It was argued that the scheme of the Income-tax Act was that once a party was shown to be the owner of a property, he must be taxed under the head "income from property" and the computation of the income must be in accordance with Section 9 of the Indian Income-tax Act. It was contended that the actual receipt of the rent in the hands of the owner is quite immaterial for the purposes of assessment. The law has laid down a particular method of computation in respect of income from property and that must be applied to arrive at the figure to be inserted against the head "income from property" in the individual assessee's assessment. In my opinion the contention of the trustees is not correct. The word "income" has not been defined in the Act, but for the purposes of the Indian Income-tax Act the expression "total income" is defined in Section 2(15). The legislature has used there the words "computed in the manner laid down in this Act." Therefore in order to ascertain the total income of an assessee....
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....ows:- "But the bald dry proposition that the mere fact of occupying a house, which house as property is already taxed, is not income in any sense, could, I think, hardly be disputed." The Court, therefore, was considering the question of the liability of the occupant to pay tax in respect of a property the income of which was already taxed in the hands of the owner. That question does not arise for consideration here. It may be observed that the rules of taxation found in the Schedules annexed to the English Act are materially different from the rules of taxation contained in the Indian Income-tax Act. This has been noticed frequently by all Courts, and therefore it will not be proper to apply the observations made in respect of the liability of the occupant to pay tax under the English Act to the liability of the trustees, the owners of the property, under the Indian Income-tax Act. Bejoy Singh Dudhuria v. Commissioner of Income-tax [1933] 1 I.T.R. 135; 60 I.A. 196 does not help the trustees because in that case the Court was not concerned with the taxation of income from immovab....
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....Act. The argument that under Section 41 the tax is to be levied in the like manner and in the same manner as to be recoverable from the beneficiaries does not help the assessee. If in the present case the ownership of this property is deemed to be vested in the beneficiaries, they could not avoid taxation on the ground that they themselves were occupying the property. It seems to me, therefore, that Section 41 of the Indian Income-tax Act does not help the assessees. The question of rate of taxation is not relevant to the present discussion. If in making a settlement the settlor does not choose to define clearly the specific and individual shares of the beneficiaries, the assessment must be at the maximum rate. Whether the taxation should be at the highest rate or not is a matter of policy, with which we are not concerned. In my opinion, therefore, the answer to the question submitted to us is in the affirmative. The assessees to pay the costs of the reference. CHAGLA, J.--I agree. It is true that under the Indian Income-tax Act the only thing that can be taxed is income and nothing else. The charging section is Section 3; it charges the total income of an assessee; and "t....