MANU/WB/0265/1967

Equivalent Citation: [1968]68ITR815(C al)

IN THE HIGH COURT OF CALCUTTA

Income-tax References Nos. 118 to 121 of 1963
Assessment Year: 1957-1958;1958-1959
Decided On: 19.03.1967
Appellants: Commissioner of Income Tax, West Bengal
Vs.
Respondent: Biman Behari Shaw Shebait.
Hon'ble Judges:
Banerjee and K.L. Roy
Case Note:
Direct Taxation - Correctness of order - Whether Tribunal misdirected itself in
holding that premises had no bona fide annual value within meaning of
section 9(2) of the Income Tax Act, 1922? - Held, Tribunal was not correct in
holding that, in view of injunction contained in will against residence of any
body in premises, premises had no letting value - That injunction would be or
relevant consideration in finding out bona fide value and whether of
injunction may very much reduce bona fide letting value of house, but
because of existence of injunction, premises cannot be said to have no letting
value, notional or otherwise - Question answered in affirmative and in favour
of revenue.
JUDGMENT
Banerjee, J. - This reference, under section 66(2) of the Indian Income Tax Act, 1922,
has been made in circumstances hereinafter stated.
The assessment years with which we are concerned are years 1957-58 and 1958-59.
One Banku Bahari Saha executed a will on November 24, 1925, and thereby intended to
found a debutter estate. He dedicated several properties to two deities installed by him,
namely, Sri Sri Iswar Benode Behari Jew and Sri Sri Iswar Benodeswar Mahadev. In this
reference we are concerned with two of the dedicated properties, namely, No. 12,
Benode Behari Saha Lane, and No. 122A, Manicktola Street, both in the town of
Calcutta. It is necessary for us to consider the following clauses of the will, in order to
understand the question referred to this court. The dedication opens with the following
paragraph :
"According to the wishes of my revered father I have built the edifice of a temple, a
Thakurabari a premises No. 12, Benode Behari Saha Lane, in close proximity to our said
family dwelling house and have installed therein the deity of Sri Sri Iswar Benode
Behari (an image of Sri Sri Iswar Radha Krishna) and Sri Sri Iswar Bendeswari Sina
(possibly a misprint for Sri Sri Iswar Benodeswar Mahadev) and have been performing
the Puja worship and seva, etc., of the same.
The list of all the immovable properties included in this will is given in the schedules

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Ka, Kha and Ga written below. This property is my estate lon enjoyed and possessed."
"Clause (11). By this instrument of Will I dedicate to the deity Sri Sri Iswar Benode
Behari and Sri Sri Iswar Benodeswar Mahadev established by me the properties as
included in the schedule (Ga) of this will and all such properties that will be included in
the schedule (Ga) in future according to the provisions of this Will from and out of the
schedule Ka and Kha. From the time of my death the aforesaid properties shall be used
in the aforesaid Dev Seva and for pious acts mentioned below and shall not at any time
be transferred in any manner such as gift, sale, etc., save and except for reasons stated
here below....
Clause (17). Nobody save and except the Brahmin performing the Worship) of the deity
and servants shall ever be competent to reside in the Thakurbati at No. 12, Benode
Behari Saha Lane and the said Thakurbati shall never be used as a place of agitation
and meeting for the sake of interiors (sic-invitation) or for any public functions."
In schedule "Ga" premises No. 122, Manicktola Street is not described either as a
temple or a Thakurbati but the area of the land only, included in the premises, is given.
Premises No. 12, Benode Behari Saha Lane, however, is described in the schedule as
"Thakurbati and temple". There is no dispute that 122, Manicktola Street, late on was
subdivided or renumbered as premises No. 122A, Manicktola Street and a temple was
actually constructed on the site.
For the assessment years with which we are concerned, the Income Tax Officer
computed the bona fide annual value of the premises No. 12, Benode Behari Saha Lane
and 122A, Manicktola Street, at the amounts which they were likely to fetch if let out in
the open market. The assessee objected to the assessment of an annual value on the
two premises and appealed before the Appellate Assistant Commissioner. The reason
which appealed to the Appellate Assistant Commissioner were :
"As regards the second ground, No. 122A, Manicktola Street, Calcutta, and No. 12,
Benode Behari Saha Lane, Calcutta are the temples of the two deities mentioned above.
These premises have not been let out and no income accrues therefrom. The Income
Tax Officer therefore was not justified in adding any income on account of these
premises. In the earlier assessment no such addition has been made. The addition of
Rs. 3,334 (Rs. 4,000 less Rs. 666 for repairs) would be therefore deleted in each of the
two assessment under appeal."
In the above view the Appellate Assistant Commissioner allowed the objection of the
assessee.
Against the order of the Appellate Assistant Commissioner, the revenue appealed before
the Appellate Tribunal. We are not concerned with the other grounds involved in the
appeal. The Appellate Tribunal agreed with the order of the Appellate Assistant
Commissioner deleting the bona fide income from two debutter premises mentioned
above with the following observations :
"The Income Tax Officer computed the bona fide annual value of the house of the
amount which they are likely to fetch if let out in the open market. The Appellate
Assistant Commissioner has, however, found that these premises were not let out the
no income accrued therefrom to the assessee. In fact, clause (17) of the Will aforesaid
says that nobody save and except the priest performing the worship of the deity and its
servants shall even be competent to reside in the temple and it shall never be used as a
place of agitation or meeting or for the sale of any public function. In view of the

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injunctions contained in the will against the residence of any body in the premises apart
from the priest performing the worship of the deity and its servants, it is quite obvious
that these premises have no letting value and the Appellate Assistant Commissioner
was, therefore, justified in excluding from the assessment the annual value thereof."
Thereupon, the Commissioner of Income Tax, at first tried to induce the Appellate
Tribunal to refer certain questions of law to this court and therein failing, induced this
court to call for a statement of case from the Tribunal on the following point of law :
"Whether, on the facts and in the circumstance of the case, the Tribunal misdirected
itself in law in holding that premises No. 12, Benode Behari Shaw Lane, Calcutta, and
No. 122A, Manicktola Street, Calcutta had no bona fide annual value within the meaning
of section 9(2) of the Income Tax Act, 1922 ?"
In order to answer the question, it is necessary for us to remind ourselves of the
provisions of sub-sections (1) and (2) of section 9 of the Income Tax which are
couched in the following language :
"9. (1) The tax shall be payable by an assessee under the head income from property in
respect of the bona fide annual value of property consisting of any buildings or lands
appurtenant thereto of which he is the owner, other than such portions of such property
as he may occupy for the purpose of any business, profession or vocation carried on by
him the profits of which are assessable to tax, subject to the following allowance,
namely,......
(2) For the purposes of the section, the annual value of the property shall be deemed to
be the sum for which the property might reasonably be expected to let from year to
year."
It is apparent from the section quoted above that even where a property is not let and
even where it does not produce any income, the Income Tax Officer is to proceed on the
basis of a notional income, which the property might reasonably be expected to yield
from year to year. Now, where a property, is not actually let, even then there ought to
be included in the annual income of the owner a notional income from the property. The
letting value of property, whether let or not, can be objectively ascertained on
reasonably basis. If there be restrictions on the letting of the premises, that may merely
reduce letting value but it cannot be said, without more, that because of the existence
of a restrictive clause there can be no notional annual income deemed to arise from the
premises. For this proposition we final ample support from two decision of the Bombay
High Court namely, D. M. Vakil v. Commissioner of Income Tax. and Sir Currimbhoy
Ebrahim Baronetcy Trust v. Commissioner of Income Tax. In the first mentioned case
Kania, Ag. C.J. (as he then was), observed :
"The legislature was therefore expressly provided that the tax shall be payable by the
assessee n respect of the bona fide final value irrespective of the question whether he
receives that value or not. Section 9(2) provides that for the purposes of this section,
the expression annual value shall be deemed to mean the sum for which, the property
might reasonably be expected to let from year to year. It is again significant to note that
the word used is might and not can or is. Reading these two paragraphs of section 9
together, it is clear that the income from property is thus an artificially defined income
and the legibility arises from the fact that the assessee is the owner of the property. It
is further provided in the section that if the owner occupies the property he has to pay
tax calculated in the manner provided therein. Therefore, by reason of the fact that the
property is not let out, the assessee does not escape taxation.

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On behalf of the trustees it was urged that in the present case the trustees are
prevented from letting out the property to any one by virtue of clays 5 of the will itself.
That, however, in my opinion, makes no deference. The liability to tax does not depend
on the power of the owner to let the property, as it also does not depend on the
capacity of the owner to receive the bona fide annual value of the property. The law has
laid down an artificial rule by which the amounts to be considered the income of the
assessee from immovable property and provided that he should be taxed on that
footing. In my opinion the argument of the Commissioner on this point is correct."
In that view of the law, we have to uphold the contention of Mr. Pal, appearing for the
revenue, that the Tribunal was not correct in holding that, in view of the injunction
contained in the will against the residence of any body in the premises (apart form the
priest preferring the worship of the deity and its servants.), the premises have no
letting value. That injunction will be or relevant consideration n finding out the bona
fide value and the whether of the injunction may very much reduce the bona fide letting
value of the house. But because of the existence of the injunction, the premises cannot
be said to have no letting value, notional or otherwise. In the view that we take, we
have to answer the question refereed to us in the affirmative and in favour of the
revenue. We, however, make one position clear. We are not sure that a temple, which is
wholly and exclusively occupied by a deity or for use of the deity, comes within the
mischief of section 9(2). We do not express any opinion on the point because that
points does not call for a decision in the present reference.
In the facts and circumstances of the case we do not make any order as to costs.
K.L. Roy, J. - I agree.
Question answered in the affirmative.

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