1987-VIL-59-ITAT-ART

Equivalent Citation: ITD 020, 681,

Income Tax Appellate Tribunal AMRITSAR

Date: 12.01.1987

INCOME-TAX OFFICER.

Vs

GOVERDHAN DASS AND SONS.

BENCH

Member(s)  : P. K. MEHTA., P. S. DHILLON.

JUDGMENT

Per Shri P.K. Mehta, Accountant Member -- This is an appeal of the revenue for the assessment year 1983-84. The revenue is aggrieved with the order of the AAC holding that income from letting out open plinths to FCI is assessable under the head 'Income from house property' instead of 'Income from other sources' and consequently allowing one-sixth deduction on account of repairs.

2. The assessee is a HUF, which, through two of its members by lease deed dated 2-3-1982, leased out stacks at monthly rent of Rs. 30 per stack to the FCI. A copy of the lease deed is 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 clause I of the deed clearly states that the lessor, i.e., the assessee had agreed to let and the lessee, i.e., the FCI agreed to hire the kutcha plinths on monthly tenancy basis and clause 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's 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 one-sixth 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 one-sixth for repairs would be available to the assessee. The assessee went in appeal and stated before the AAC that its income for the assessment years 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 assessment year 1983-84 was concerned. The AAC very summarily dealt with the issue and held that he was inclined to agree with the reasoning of the assessee's authorised representative that income from letting out of plinth area should be assessed as 'Income from house property' and moreover, the assessee was also paying municipal taxes. He also upheld the assessee's claim for deduction of one-sixth for repairs. The revenue has come in appeal.

3. We have heard the rival submissions. The assessee's counsel firstly urged that a consistent view be taken by the revenue and it was further pointed out that the ITO for the assessment year 1981-82 also computed property income and for the assessment year 1982-83 he wrote a detailed order dated 29-3-1985 after making enquiries and upheld the contention of the assessee that the income disclosed was taxable under the head 'Income from house property'. It was further pointed out that the assessment for the year 1983-84 was made earlier than the assessment for the assessment year 1982-83 made by order dated 12-12-1984. On behalf of the revenue, it was submitted that the view taken in other assessments was erroneous and the view taken for the assessment year under appeal is correct and that there was no res judicata or estoppel applicable in income-tax proceedings. It was further submitted that an erroneous view in law could not be allowed to be perpetuated on the ground of consistency and the issue deserves to be gone into on merits. We have considered the submissions made and looked into the lease deed produced and feel that the matter deserves to be seen on merits and the rule of consistency in the facts and the circumstances of the case cannot be properly invoked. The case of the assessee is, in fact, based on interpretation of whether the open land on which the kutcha plinths were there was land appurtenant to any building so as to be taxable under the head 'Income from house property' within the meaning of section 22 of the Income-tax Act, 1961 ('the Act'). This involves the interpretation of section 22 and the matter cannot be brushed away by merely referring to the divergent views taken by the Income-tax Department in the earlier and later years.

4. Coming to the merits, the assessee's counsel rested his case on the ITO's assessment order dated 29-3-1985 for the assessment year 1982-83, which was passed after the impugned order for the assessment year 1983-84. He invited attention to the fact noted in that order that the Inspector visited the spot and it was observed that the land in question was adjacent to the building. This building, according to Shri Khanna, was a residential house belonging to the assessee-HUF, which was situated on about half acre of land and the entire open land belonging to the assessee-HUF near the house was stated to be about 18 acres. It was explained that out of this 18 acres piece of open land 2 1/2 acres had the kutcha plinths or stacks, which were let out to the FCI. According to him, the fact of existence of house belonging to the assessee-HUF would render the whole open land near the house to be land appurtenant to that house and its income was, therefore, rightly taxable under section 22.

5. The case of the revenue, on the other hand, was that the piece of open land of 18 acres could not be said to be land appurtenant to the residential house and this was open land belonging to the assessee out of which a piece of 2 1/2 acres was let out to the FCI having kutcha stacks on it. A copy of assessee's letter addressed to the ITO in the course of assessment proceedings of 1982-83 was also filed to show that the land let out to the FCI with the kutcha plinths was provided with barbed wire fencing and thus it had ceased to be land appurtenant to the house of the assessee. In regard to the payment of house tax, it was submitted that the assessee was contesting the levy of house tax by the Municipal Committee on the ground that it was agricultural land, which had been let out to the FCI and, therefore, the assessee could not plead that to be a factor for treating the rental income as income from house property. He referred to two authorities Chowdhury Sharafat Hussain v. CIT [1956] 29 ITR 759 (Pat.) and CIT v. Kanaiyalal Nimani [1979] 120 ITR 892 (Cal.) and observations in the commentary of Sampath Iyengar's Income-tax, Vol. 1, 7th edn., pp. 1002-1003.

6. On a consideration of the rival submissions, 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 section 22. For this purpose, we may consider the meanings to be assigned to the word 'appurtenant' used in the section. In ordinary English language 'appurtenant' means that which appertains and the word 'appertains' 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 and Whiteley (Eighth edn.) 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, section 19."

7. Again in K.J. Aiyer's Judicial Dictionary, Eighth edn. 1980 at page 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'.

8. Venkataramaiya's Law Lexicon with Legal Maxims, Second edn., Vol. I at pages 183-184 deals with the words 'appendant' and 'appendant and appurtenant' in the following way :

"Appendant--This word, in its general sense, denotes anything annexed in whatever manner to any other. But as applied to incorporeal hereditaments in the law of real property, it denotes something annexed as an incident to some other and corporeal hereditaments and the annexation 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 departure their beasts of husbandry during such times as their lands (which were all of them arable) were in ear, was called common of pasture appendant ; and similarly, the Lord from the first, and of necessity, erected and endowed a church (being the manor or parish church) for the religious education and welfare of his tenants, and the endowment of such church was called an advowson appendant, i.e., to the manor. 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, 1874 edn., pp. 27-28."

"Appendant and appurtenant,--Attached to ; used to describe an accessory. Hereditament ; annexed to a principal hereditament ; appendants are naturally and originally annexed to the principal ; appurtenances may arise at any time through express grant or prescription.--Readers' 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 Venkataramaiya's Law Lexicon with Legal Marims 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 be said to be necessary in any way for the enjoyment of the house. Again it has been admitted by the assessee in a letter addressed to the 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 disannexes the land let out to the 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 section 22 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 one-sixth for repairs cannot also be upheld.

9. In the result, we reverse the order of the AAC and restore the order of the ITO and allow the appeal of the revenue.

 

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