High Court Of Punjab & Haryana
Gowardhan Das & Sons vs. CIT
Sections 22, 56
Asst. Year 1983-84
Adarsh Kumar Goel & Rajesh Bindal, JJ.
IT Ref. No. 99 of 1988
28th September, 2006
Counsel Appeared
S.K. Mukhi, for the Assessee : Dr. N.L. Sharda, for the Revenue
JUDGMENT
By the court :
Following question of law has been referred for opinion of this Court by the Tribunal, Amritsar Bench, Amritsar, arising out of its order dt. 12th Jan., 1987 in ITA No. 257/Asr/1986, in respect of asst. yr. 1983-84 : “Whether, on the facts and in the circumstances of the case, the Tribunal Amritsar was right in law in holding that the rental income from letting out open plinths to Food Corporation of India is assessable under the head ‘Income from other sources’ and not under the head ‘Income from house property’ ?”
2. Facts noticed by the Tribunal in the statement of case are : “The assessee is ‘an HUF’ which through two of its members by lease deed dt. 2nd March, 1982, leased out stacks at monthly rent of Rs. 30 per stack to the FCI. A copy of the lease deed was furnished by the Departmental Representative and it was pointed out that it is a proforma in which the lease agreement is entered and there is omission in the proforma to cut out the unnecessary word ‘godown’ occurring in several clauses. The cl. 1 of the deed clearly states that the lessor i.e., the assessee had agreed to let and the lessee i.e. the Food Corporation of India agreed to hire the Kutcha plinths on monthly tenancy basis and cl. II provides for payment of monthly rent of Rs. 30 per stack for Kutcha plinths of Unit No. II as described in the attached schedule. It is not disputed by the assessee counsel Shri Subash Khanna, that the subject-matter of letting out were the Kutcha plinths on open land. A rental income of Rs. 58,402 was derived by the assessee-HUF, which it claimed to be taxable under the head ‘Income from house property’ and the prescribed deduction of 1/6th for repairs was sought. The ITO on examining the matter held that the income was rightly taxable under the head ‘Income from other sources and no fixed deduction of 1/6th for repairs would be available to the assessee. The assessee went in appeal and stated before the AC that its income for the asst. yrs. 1982-83 and 1984-85 from this source had been taxed as ‘Income from house property’ and there was no justification for making a departure so far as the asst. yr. 1983-84 was concerned. The AC very summarily dealt with the issue and held that he was inclined to agree with the reasoning of assessee’s Authorised Representative that income from letting out of plinth area should be assessed as ‘Income from property’; and moreover, the assessee was also paying municipal taxes. He also upheld the assessee’s claim for deduction of 1/6th for repairs.”
3. The Tribunal upheld the finding recorded. In para 6 of its order, it was observed : “6. On a consideration of the rival submission, we find that the issue to be decided in this appeal is whether the open land having Kutcha plinths or stacks could be considered to be land appurtenant to building within the meaning of s. 22 of the IT Act. For this
purpose, we may consider the meaning to be assigned to the word ‘appurtenant’ used in the section. In ordinary English language ‘appurtenant’ means that which appertains and the word ‘eppertains’ means belonging to. In the context of house property, it will be land belonging to the house property. The other meanings of the word ‘appurtenance’ in the dictionary are ‘appendage’ or accessory’. In the Law Dictionary of Mozley & Whiteley (8th Edn.) at p. 26 words ‘appurtenance’ or ‘things appurtenant’ have been dealt with appurtenance in relation to a dwelling has been defined as under : ‘Appurtenance, in relation to a dwelling or to a school; college or other educational establishment includes all land occupied therewith and used for the purpose thereof : General Rate Act, 1967. s. 19.’
Again in K.J. Aiyer’s Judicial Dictionary (8th Edn.–1980) at p. 99, the word ‘appendant’ is considered to mean ‘where a right of property of an accessory kind is attached to another so as to be enjoyed with it, it is described as appendant or appurtenant.’ Venkataramaiya’s Law Lexicon with legal maxims (2nd Edn.) in Vol. 1 at pp. 1283-84 deals with the words ‘appendant’ and ‘appendant and appurtenant’ is following way : Appendant—This word, in its general sense, denotes anything annexed in whatever manner to any other, but as applied to incorporeal heareditaments in the law of real property, it denotes somethings annexed as an incident to some other and corporeal hereditament, and the anexation of which thereto, is of a necessary character, and has therefore existed from the very beginning of time. Thus, that amount of common which from the first, and as of necessity the lord assigned to his villains to depasture there beasts of husbandry during such time as their lands (which were all of them arable) were in ear, was called common of pasture appendant, and similarly, the lord form the first, and of necessity, erected and endowed a Church (being the manorr or parish church) for the religious education and welfare of his tenants, and the endowment of such church was called an endvowson appendant i.e. to the minor. It is also a characteristic of properly appendant rights, that once they are disannexed, although for ever so short a time, from the principal hereditament, so as to become ingross, they can never become appendant again—Brown’s Law Dictionary and Institute of the Whole Law, 1875 Ed. pp 28-29.” ‘Appendant and appurtenant-attached to used to describe an accessory. Hereditament : annexed to a principal hereditament: appendants are naturally and originally annexed to be principal : appurtenances may arise at any time through express grant of prescription : Reader’s Digest, Great Encyclopaedic Dictionary Vol. III p. 1154.’
It is clear from the above definitions that the concept of appurtenance in the context of a house is that the land is necessary or connected with the enjoyment of the house and as pointed out in the definition of ‘appendant’ given in the Venkataramaiya’s Law Lexicon that once the land is disannexed from the main property, it can never become appendant or appurtenant again. Bearing in mind these principles, it is obvious that 18 acres of open land cannot per se be considered to be appurtenant to a house claimed to be situated on about half acre of land. The land let out to the FCI is stated to be 2.1/2 acres. The whole piece of land of 18 acres cannot said to be necessary anyway for the enjoyment of the house. Again it has been admitted by the assessee in a letter addressed to ITO in the course of assessment proceedings of the year 1982-83, which is filed by the Departmental Representative, that the land let out to the FCI is having a barbed wire fencing. The putting of barbed wire fencing certainly disannexed the land let out to FCI from the house and hence from this angle also, the land let out to the FCI ceases to be land appurtenant to the house. Consequently, we hold that the land let out to the FCI cannot be said to be any land appurtenant to the house of the assessee and, therefore, it cannot be said to be liable to tax under s. 22 of the IT Act as ‘income from house property’. The income, therefore has been rightly considered to be taxable by the ITO under the head ‘Income from other sources’. This being so, the claim of the assessee for fixed statutory deduction of 1/6th for repairs cannot also be upheld.”
We have heard learned counsel for the parties. Only contention raised on behalf of the assessee is that for the previous year i.e. 1982-83, the contention of the assessee was accepted. It was also submitted that land in question was adjacent to the residential house which was situated on about half acre of land and, therefore the entire open land which was about 18 acres ought to have been taken as appurtenant land.
We are unable to accept the submission made. It is clear from the statement of case that what was let out was Kutcha plinths on open land, which by no stretch of imagination, could be termed as house property. The property in question from which income was derived, was neither building nor land appurtenant thereto within the meaning of s. 22 of the IT Act, 1961 (for short, ‘the Act’). Provisions of s. 22 of the Act are extracted below : “22. The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income tax under the head ‘Income from house property’.” A plain reading thereof provides that it is the income from property consisting of any ‘building’ or ‘land appurtenant thereto’ which is assessed under s. 22 of the Act and not the income from renting out of open land or some Kutcha plinth only. In the present case, no building having been let out, there is no question of treating the rent received for letting out of land only as income from house property. What is covered by the expression “appurtenant” is the land which is necessary for enjoyment of the building and not the land only. Similar issue came up for consideration before Madras High Court in M. Ramalakshmi Reddi vs. CIT (1998) 146 CTR (Mad) 154 : (1998) 232 ITR 281 (Mad), where the issue was decided against the assessee and in favour of the Revenue.
In view of the above, the question referred is decided against the assessee and in favour of the Revenue. Reference is disposed of accordingly.
[Citation : 288 ITR 481]
