Temporary structures put up by the assessee on leased land, consisting of bustees with no foundation, light plinths or floors, walls made of planks or corrugated sheets fixed on bamboo frames or indigenous logs of wood, and corrugated sheet roofs, were held to be "buildings" within the meaning of Section 9 of the Indian Income-tax Act, 1922, and the income arising therefrom was liable to be assessed in the hands of the assessee under the said section.

DIPAK KUMAR SEN, J.

( 1 ) AT the instance of Tinsukia Development Corporation Ltd. , the assessee, the Tribunal has been directed by this court under Section 256 (2) of the I. T. Act, 1961, to refer the following questions of law :" (1) Whether in view of the objects for which the assessee-company was formed and/or the activities of its predecessors-in-title and itself in respect of the Khiraj lease under the Government of Assam the conclusion of the Tribunal that the income from such leasehold properties converted into residential and trading sites, is assessable under the head " House Property " is sustainable in law ? (2) Whether, on the facts and in the circumstances of the case, and on an interpretation of the various leases and sub-leases and indentures, the entire income from pucca building should have been assessed under Section 9 of the Indian Income-tax Act, 1922, or Section 22 of the new Act ? (3) Whether, on the facts and in the circumstances of the case, the temporary structures are buildings within the meaning ,of Section 9 of the Indian Income-tax Act, 1922, and the income therefrom is liable to be assessed as owners of property under Section 9 of the Indian Income-tax Act, 1922, or Section 22 of the new Act ? "

( 2 ) THE relevant facts which have been found or admitted as will appear from the statement of the case and annexures thereto may be shortly noted as follows : The assessment year involved is 1960-61, the relevant accounting year having ended on the 31st March, 1960. The assessee is a limited company. Its objects are contained in its memorandum of association which has been made a part of the statement of the case. Certain lands in the town of Tinsukia had been demised on lease by the Deputy Commissioner of Lakhimpur to one Senairam Doongarmull in 1934. The said leases were in the form known as " Khiraj Lease " prevalent in the State of Assam in respect of town lands.

( 3 ) IT is not disputed that Tinsukia Development Corporation Ltd. , the assessee, came to enjoy the rights of Senairam Doongarmull, the lessee, under the said leases. The assessee put up bustees on the land consisting of structures with no foundation but with light plinths or floor and with walls made of planks of unseasoned indigenous wood or corrugated sheets fixed on bamboo frames or indigenous logs of wood with corrugated sheet roof.

( 4 ) IN the assessment in question it was claimed by the assessee that the income from the said leasehold properties was not assessable under Section 9 of the Indian I. T. Act, 1922, but such income was assessable under Section 12 of that Act. This claim was rejected by the ITO. On appeal, the AAC sustained the rejection of the claims of the assessee by the ITO. The AAC followed an order of the Appellate Tribunal in respect of an earlier assessment of the same assessee for the assessment years 1956-57 to 1959-60.

( 5 ) ON further appeal to the Appellate Tribunal, the earlier order of the Tribunal was again followed.

( 6 ) THIS order of the Tribunal has resulted in this reference at the instance of the assessee.

( 7 ) TO appreciate the contentions of the assessee, Section 9 of the Indian I. T. Act, 1922, may be noted. This section reads, as follows :" 9. Property.-- (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 purposes of any business, profession or vocation carried on by him the profits of which are assessable to tax. . . . . . . . . "

( 8 ) THE learned standing counsel appearing on behalf of the assessee has contended that in the instant case unless it is shown that the building in question included the land on which the building is standing or alternatively the expression " buildings or lands " is read conjunctively as " buildings and lands ", Section 9 cann

Click Here to Read the rest of this document