| Case ID |
167baf58-ba1d-49ec-a72f-d5bce8384596 |
| Body |
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| Case Number |
Income Tax Reference No.221 of 1987 |
| Decision Date |
Mar 12, 1992 |
| Hearing Date |
|
| Decision |
The court held that the transaction in question was not a sale but a lease due to the agreement's provisions that allowed the vendor to re-enter the property upon breach of conditions. The income derived from the rental of the flats was assessable as 'income from other sources', confirming the Income Tax Officer's assessment. The court further clarified that the absence of a registered deed does not negate the existence of a lease, and the agreement's terms indicated a transfer of lease rights rather than outright ownership. Thus, the rental income was not assessable under 'income from house property'. |
| Summary |
In the case concerning K. N. Razdan and the Commissioner of Income Tax, the Calcutta High Court addressed the taxation of rental income derived from two office flats. The primary issue was whether the rental income should be assessed under 'income from house property' or 'income from other sources'. The court concluded that the agreement for sale dated December 4, 1972, was in substance a lease, given the vendor's right to re-enter upon breach of conditions. The court emphasized that mere possession under a sale agreement without a registered deed does not confer ownership. Therefore, the rental income was assessed as 'income from other sources' under Section 56 of the Income Tax Act, 1961. This case reiterates the principles governing lease agreements and the implications for tax assessments on rental income. It also highlights the importance of understanding the nature of property transactions in relation to tax obligations, making it a significant case for taxpayers and legal professionals dealing with property and income tax matters. |
| Court |
Calcutta High Court
|
| Entities Involved |
Not available
|
| Judges |
AJIT K. SENGUPTA,
K. M. YUSUF
|
| Lawyers |
N.K. Poddar,
S.K. Mitra,
R.C. Prasad
|
| Petitioners |
K. N. Razdan
|
| Respondents |
COMMISSIONER OF Income tax
|
| Citations |
1995 SLD 19,
(1994) 70 TAX 123,
(1993) 204 ITR 83,
1995 PTD 234
|
| Other Citations |
CIT v. Ganga Properties Ltd. (1970) 77 ITR 637 (Cal.),
CIT v. Hans Raj Gupta (1982) 137 ITR 195 (Delhi),
CIT v. Prabhabati Bansali (1983) 141 ITR 419 (Cal.),
CIT v. Ragbir Singh (S.) (1965) 57 ITR 408 (SC),
CIT v. Rani Bhuwaneshwari Kuer (1964) 53 ITR 195 (SC),
CIT v. Rani Bhuwaneshwari Kuer Tekari Raj (1962) 45 ITR 357 (Pat.),
CIT (Add.) v. Sahay Properties and Investment Co. (P.) Ltd. (1983) 144 ITR 357 (Pat.),
CIT v. Sahney Steel and Press Works (P.) Ltd. (1987) 168 ITR 811 (AP),
CIT v. Sidhwa (T.P.) (Smt.) (1982) 133 ITR 840 (Bom.),
CIT v. Trustees of H.E.H. the Nizams Miscellaneous Trust (1986) 160 ITR 253 (AP),
CIT (Addl.) v. U.P. State Agro Industrial Corporation Ltd. (1981) 127 ITR 97 (All.),
CIT v. Zorostrian Building Society Ltd. (1976) 102 ITR 499 (Bom.),
Jodha Mal Kuthiala (R.B.) v. CIT (1971) 82 ITR 570 (SC),
Kala Rani (Sint.) v. CIT (1981) 130 ITR 321 (P&H),
Madgul Udyog v. CIT (1990) 184 ITR 484 (Cal.),
Nawab Sir Mir Osman Ali Khan (Late) v. CWT (1986) 162 ITR 888 (SC),
Ramji Keshavji v. CIT (1945) 13 ITR 105 (Bom.),
S.B. (House and Land) Pvt. Ltd. v. CIT (1979) 119 ITR 785 (Cal.),
Sushil Ansal v. CIT (1986) 160 ITR 308 (Delhi),
Tarundra Nath Tagore v. CIT (1958) 33 ITR 492 (Cal.)
|
| Laws Involved |
Income Tax Act, 1961,
Indian Transfer of Property Act, 1882
|
| Sections |
56,
63,
111
|