Judgment

KHANNA, J. :- These three appeals on certificate by the Commissioner of Income-tax are against the judgment of the Allahabad High Court* whereby the High Court answered the following question referred to it under Section 66 (1) of the Indian Income-tax Act, 1922 hereinafter referred to as the Act) in favour of the assessee-respondent and against the revenue.

* (1970) 76 ITR 201 (All).

"Whether in the facts and circumstances of the case, the assessee is entitled for each of the years under consideration to the exclusion from the income under the head property of an amount equal to the irrecoverable rent of the Grant Hotel property for oneyear which has not been so excluded in the preceding assessments?"

2. The matter relates to the assessment years 1957-58, 1958-59 and 1959-60. The assessee is the owner of a building known as Grand Hotel in Civil Lines Delhi. The income from this building was assessed from year to year under S. 9 of the Act as income from property. Subsequently there was a dispute between the assessee and her tenant. Protracted litigation followed and ultimately a compromise was reached between the assessee and the tenant as per compromise, deeds dated December 8, 1954 and July 9, 1955. According to the assessee, a total amount of Rs. 1,85,892 representing rent due on account of Grand Hotel became irrecoverable from the tenant. At the time of the assessment year 1956-57 the assessee was able to secure deduction under item No. 38 of the Government of India notification No. 878F dated March 21, 1922 as regards unrealised rent in previous years. The assessee made similar claims for deduction at the time of the assessment for the years 1957-58, 1958-59 and 1959-60. The claim was not specifically made before the Income-tax Officer but was made in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner declined to entertain the claim made at such a late Stage. When the matter went up before the Tribunal in further appeal, the Tribunal permitted the assessee to raise that point before it. It was then urged on behalf of the department that in view of the deduction made for the assessment year 1956-57, no further deduction could be claimed by the assessee for the subsequent years. This contention advanced on behalf of the department was not accepted by the Tribunal. The Tribunal took the view that the claim could properly be made for the deduction in the assessment for the three years with which we are concerned inspite of the fact that such claim had been allowed in assessees favour in the year 1956-57. On this view the Tribunal directed the Income-tax Officer to compute the total rent which had become irrecoverable in respect of Grand Hotel property. The Tribunal further directed that to the extent the irrecoverable rend had not been exempted in the previous assessment for 1956-57 should be exempted during the years under appeal in so far as the income from property was concerned. On application filed by the Commissioner of Income-tax the question reproduced above was referred to the High Court. The High Court, as stated above, answered the question in the affirmative in favour of the assessee.

3. In appeal before us Mr. Sharma on behalf of the appellant has assailed the judgment of the High Court. As against that, Mr. Manchanda on behalf of the assessee-respondent has canvassed for the correctness of the view taken by the High Court.

4. Before dealing with the contentions advanced before us, it would be appropriate to refer to the relevant provisions on the subject. Section 9 of the Act deals with tax payable under the head "Income from property". According to that section, 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 purposes of any business, profes