1979 (1) TMI 87

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....' under section 9 of the Act ? " We are concerned in this reference with the assessment of the assessee in respect of the assessment years 1960-61 and 1961-62. The State of Bombay had originally granted a lease in favour of a company by name Karimjee Properties Limited of an open plot for construction of a building. This lease was assigned on November 6, 1950, by the said company in favour of one Khetan. Khetan formed a company by name Khetan Estate Ltd. with an issued capital of Rs. 17.50 lakhs on November 24, 1950. This company started construction of a building on the land and the building was completed in September, 1952. In October, 1952, the company allotted flats to its shareholders in proportion to the shares held by the sharehol....

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.... argument that since it is a notional income it cannot be assessed under 'Other sources' is not tenable. Once it is conceded that it represents income and is an exempted item (sic) it has to be assessed to income-tax and if it is not assessable under any of the specific heads provided in the Act, it will be assessable under the residuary head 'Other sources'. In this case there cannot be any doubt that the benefit the assessee received by the free use of the flat is income. It is not necessary that income should always be in cash. Benefits which are in kind do constitute income. " We may at this stage point out that there are two glaring infirmities in the observations made by the Commissioner. Firstly, it is difficult to appreciate his ....

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....nal basis has remained unanswered," and the Tribunal has taken the view that s. 12, unlike s. 9, did not permit inclusion of notional income. An argument was raised before the Tribunal on behalf of the revenue that if the assessee were to lease out the flat on rent, he would have earned income therefrom and by occupying the flat himself, the assessee has denied the income to himself. This argument was rejected and, in our opinion, rightly by the Tribunal when the Tribunal observed that the ITO cannot tax the assessee on the basis that if he had permitted other persons to use the flat, he would have earned income. An argument was also advanced before the Tribunal that income from the property of the assessee should be taxed as dividend becau....