2001 PLP 2755 (PTD)

Mr. Deb appearing for the Department explained that the deductions in regard to night guard, sweeper, caretaker and certain electricity charges could not be deducted if those were to be treated as deductions from income from house property. Mr. Deb has referred us to sections 23 and 24 of the Income‑tax Act. He has also relied on certain dicta in the case of CIT v. Sreelekha Banerjee (Smt.) (1989) 179 ITR 46 (Cal.), whereby his submissions in' regard to caretaker's expenses are fortified. On behalf of the assessee it was pointed out that if the facts found by the Tribunal are taken as unassailable, as indeed those must be in any reference matter, the points of law regarding computation of income from house property and allowable deductions in that regard do not arise. If the assessee's case is this, that what was taken as rent is really composite rent, a part of it forming income from house property in the real sense and another part being income from other sources, obtained by supplying to the tenants services like electricity, then and in that event the restrictions and impermissibilities attached to computation of house property income cannot also attach to the income from other source. Once the bifurcation of the income between pure rent and income from other sources is found to be on an unchallengeable footing, the deductions for caretaker, night guard, electricity etc. cannot be resisted in so far as those are sought to be knocked off from the portions relatable to income from other sources. In support of this proposition reliance was placed on the case of CIT v. Kanak Investments (Pvt.) Ltd. (1974) 95 ITR 419 (Cal.) and also the Supreme Court decision of Karnani Properties Ltd. v. CIT (1971) 82 ITR

547. From the above Supreme Court case it is quite clear that the High Court is not to touch findings of fact by the Tribunal and must proceed to determine questions of law, if those should arise, on the substratum of facts found by the Tribunal. In Karnani Properties' case (1971) 82 ITR 547 (SC), also the point about income being in one part from the house purely, and in the other part from other sources was involved. Activities which had been carried on in an organised manner for the purpose of earning profits from tenants were found to be relatable to assessment under section 10 (the 1922 Act was involved there). If in the instant case the findings before the Tribunal were that the rent is a pure one, arising wholly out of house property as income therefrom, the strict application of sections 23 and 24 alone might have been involved and in that event a question of law might have been got referred on the basis of the dicta in CIT v. Sreelekha Banerjee (Smt.) (1989) 1.79 ITR 46 (Cal.). But here the Tribunal stated as follows: " ....that there did exist understanding between the assessee, land‑lady, and her tenants that this part of expenditure shall be borne by her. That being so rent charged by the assessee has to be treated as composite rent as including partly on account of the services rendered by the assessee. " The above finding of the Tribunal is a finding of fact and an acceptance that the rent charged by the assessee has to be treated as composite. If it is composite it does not wholly arise from house property. If it does not wholly arise from house property the admissibility as under sections 23 and 24 are not the end of the category of allowable deductions. If these two sections are not the end of the categories then the question sought to be referred to us is a mere academic question. We are of the opinion that in view of the facts found by the Tribunal no question of law arises to be referred as the deductions claimed, if relatable to income from other sources can well be claimed notwithstanding the provisions of sections 23 and 24 of the Income‑tax Act. For the reasons above, the rule is discharged. All parties and all others concerned to act on a signed xerox copy of this dictated order on the usual undertakings: M.B.A./278/FC Rule discharged.