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2001 DIGILAW 559 (GUJ)

COMMISIONER OF INCOME TAX v. JESINGBHAI I. SHETH

2001-07-31

ANIL R.DAVE, D.A.MEHTA

body2001
A. R. DAVE, J. ( 1 ) AT the instance of the Revenue, the following question has been referred to this Court for its opinion under the provisions of Section 256 (1) of the Income Tax Act, 1961 (hereinafter referred to as the `act ). "whether the assessee-HUF was entitled to avail of the benefit of Section 23 (2) of the I. T. Act, 1961?"learned advocate, Mr. Bharat Nayak has appeared for the applicant. Nobody has appeared for the respondent-assessee though the respondent has been served. ( 2 ) THE facts giving rise to the present Reference, in a nut shell, are as under:the assessee is a Hindu Undivided Family which is an owner of a house property. Members of the assessee-HUF were residing in the house property owned by the assessee-HUF. In the circumstances, for the assessment year 1981-82, the assessee-HUF claimed deduction under the provisions of Section 23 (2) of the Act as the house property was occupied by the members of HUF. ( 3 ) THE Assessing Officer did not allow the deduction claimed by the assessee because according to him, the said deduction can be given only to an individual. ( 4 ) BEING aggrieved by the assessment framed by the Assessing Officer, the assessee filed an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner upheld the claim of the assessee and directed the Assessing Officer to grant deduction under the provisions of Section 23 (2) of the Act. Being aggrieved by the order passed in the appeal by the Appellate Assistant Commissioner, the Revenue filed an appeal before the Tribunal. The Tribunal upheld the order passed by the Appellate Assistant Commissioner. In the circumstances, the question stated hereinabove has been referred to this Court for its opinion. ( 5 ) LEARNED Advocate Mr. Bharat Nayak, appearing for the Revenue, has submitted that the Tribunal has materially erred in law while interpreting the provisions of Section 23 (2) of the Act. It has been submitted by him that according to the provisions of Section 23 (2) of the Act, the deduction under the said provision can be given only when the owner of the house property occupies the property for his own residence. It has been submitted by him that according to the provisions of Section 23 (2) of the Act, the deduction under the said provision can be given only when the owner of the house property occupies the property for his own residence. The relevant portion of Section 23 (2) of the Act has been reproduced hereinbelow:section 23: (1) xxx (2) where the property consists of- (A) a house or part of a house in the occupation of the owner for the purpose of his own residence- (I) which is not actually let during any part of the previous year and no other benefit therefrom is derived by the owner, the annual value of such house or part of the house shall be taken to be nil; (ii) xxx (b) xxx (c) xxx (3) xxxit has been submitted by the learned advocate that upon perusal of the language used in Section 23 (2) of the Act, it is very clear that the owner of the house property must occupy the house property for his own residential purpose for availing the deduction under Section 23 (2) of the Act. It has been submitted by him that in the instant case, the property has been owned by the assessee, who is an HUF. According to him, an HUF or any other assessee, who is not a natural person, cannot get deduction under the provisions of Section 23 (2) of the Act. Only a natural person can live in his or her own house and as an HUF is not a natural person, it cannot claim deduction under the provisions of Section 23 (2) of the Act. It has been submitted that the Tribunal committed an error while interpreting the provisions of Section 23 (2) of the Act as well as the Judgment delivered in the case of COMMISSIONER WEALTH TAX VS. SHETH JAYANTILAL AMRATLAL, WTR No. 26 to 28 of 1971, decided on 13th December, 1973. It has been submitted by the learned advocate, relying upon the judgment delivered in the case of COMMISSIONER OF INCOME-TAX VS. MOHD. AMIN TYAMBOO, [1980] 125 ITR 375, that the Assessing Officer had rightly rejected the claim made by the assessee with regard to the deduction under the provisions of Section 23 (2) of the Act. It has been submitted by the learned advocate, relying upon the judgment delivered in the case of COMMISSIONER OF INCOME-TAX VS. MOHD. AMIN TYAMBOO, [1980] 125 ITR 375, that the Assessing Officer had rightly rejected the claim made by the assessee with regard to the deduction under the provisions of Section 23 (2) of the Act. The learned advocate has relied upon the judgment delivered in the said case as well as in the case of COMMISSIONER OF INCOME-TAX VS. K. GANGIAH CHETTY AND SONS, [1995] 214 I. T. R. 548 to substantiate his submission that only an individual can claim the benefit of deduction under the provisions of Section 23 (2) of the Act. Other assesses like partnership firm, companies etc. cannot claim deduction under the provisions of Section 23 (2) of the Act. Thus, it has been submitted by him that except an individual, no other person can get deduction under the provisions of Section 23 (2) of the Act. ( 6 ) WE have heard the learned advocate and we are of the view that the submissions made by the learned advocate are well founded. Upon perusal of the language used by the Legislature in the said section, it is very clear that the owner of the property has to use the property for his own residence so as to avail the benefit of deduction under the provisions of Section 23 (2) of the Act. It also appears that except an individual, no other person can claim deduction under the said provision. Moreover, if we look at the provisions of Section 23 (3) of the Act, it is very clear that if an individual, who owns only one residential house property and if he cannot actually occupy the house property by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, the annual value of the house is to be taken as nil. For the sake of convenience, the said sub-section is reproduced hereinbelow:section 23 (3): Where the property referred to in subsection (2) consists of one residential house only and it cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, the annual value of such house shall be taken to be nil: Provided that the following conditions are fulfilled namely :- (i) such house is not actually let, and (ii) no other benefit therefrom is derived by the owner. ( 7 ) UPON reading sub-sections 23 (2) and 23 (3) of the Act together, one cannot have any doubt that except an individual, no other person can claim deduction under the provisions of Section 23 (2) of the Act because Section 23 (3) of the Act also refers to an individual and not to any other juristic person as only a natural person can "reside" at a different place for his business, profession or employment and question of residence would not arise in case of any other assessee. Thus, upon conjoint reading of subsections 2 and 3 of Section 23 of the Act, it is very clear that the Tribunal committed an error by allowing the deduction under Section 23 (2) of the Act to the assessee, who is an HUF. ( 8 ) WE may incidently observe here that this Court had an occasion to interpret the provisions of Section 54 of the Act in the case of RAVINDRA GUNVANTLAL SHAH VS. COMMISSIONER OF INCOME-TAX, [1994] 208 I. T. R. 995. In the said case, the assessee was an HUF and had claimed an exemption under the provisions of Section 54 of the Act as family members of the assessee-HUF were residing in the property which had been sold out by the assessee. Looking to the language of Section 54 as it stood at the relevant time, this Court observed that as neither the assessee nor any of his parents was using the residential house for the purpose of residence, exemption claimed by the assessee was not available to the assessee. Looking to the language of Section 54 as it stood at the relevant time, this Court observed that as neither the assessee nor any of his parents was using the residential house for the purpose of residence, exemption claimed by the assessee was not available to the assessee. This Court observed in the said judgment that the words "mainly for the purpose of his own" would suggest that an individual was within the contemplation of the Legislature. Similarly, even in the instant case, the words "in the occupation of the owner for the purpose of his own residence" would also denote that an individual was within the contemplation of the Legislature while making the provisions for deduction under Section 23 (2) of the Act. ( 9 ) FOR the reasons stated hereinabove, in our opinion, the assessee, an HUF, would not be eligible for deduction under the provisions of Section 23 (2) of the Act and, therefore, the Tribunal committed an error by confirming the order of the Appellate Assistant Commissioner. We, therefore, answer the question referred to this Court in the negative, that is, in favour of the Revenue and against the assessee. ( 10 ) THE reference thus stands disposed of accordingly with no order as to costs. .