( 1 ) THIS appeal by the Revenue under Section 260a of the Income-tax Act, 1961 (for short the Act ) is directed against the order, dated 25 February 2003, passed by the Income-tax Appellate Tribunal,delhi Bench-A, Delhi (for short the Tribunal ) in ITA No. 4649/del/98, pertaining to assessment year 1996-97. According the Revenue, the impugned order involves the following substantial questions of law: " (1) Whether the ITAT was correct in law in deleting the addition of Rs. 4,07,286-00 being the arrears of rent, made by the Assessing Officer to the income of the assessee ?" " (2) Whether the amount of Rs. 4,07,286-00 being the arrears of rent could be taxed under the head "income from house property"or under the head "income from other sources"?" " (3) Whether the provisions of section 25b introduced by the Finance Act 2000 is clarificatory in nature and therefore have retrospective effect ?"

( 2 ) THE material facts, which lie in a narrow compass, are as follows: the respondent assessee is a lessor of a portion of the property bearing No. C-37, Connaught Place, New Delhi. The property was leased out to State Bank of Saurashtra. Vide agreement dated 1 August 1995, the rent was enhanced to Rs. 43,758/- as against the rent of Rs. 8,976/- per month payable before coming into force of the agreement. Pursuant to the said agreement, the assessee received a sum of Rs. 6,26,076/-, which included the arrears of rent for the period from 1 March 1994. In her statement of total income for the previous year ended on 31 March 1996 and relevant to the assessment year 1996-97, the assessee computed the arrears of rent for the period 1 April 1995 to 31 August 1995 i. e. a period of five months falling in the relevant previous year, amounting to Rs. 2,18,790/- and offered the same as rental income for the said assessment year. It was claimed by the assessee that the difference of Rs. 4,07,786/-, being the balance amount of arrears of rent relatable to the earlier years, was not be assessed in the assessment year 1996-97.

( 3 ) WHILE issuing the intimation under section 143 (1) (a) of the Act, the Assessing Officer rejected the claim of the assessee and brought the entire amount of arrears of rent received during the previous year, relevant to the assessment year 1996-97, as the income for the said assessment year.

( 4 ) AGGRIEVED, the assessee preferred appeal before the Commissioner of Income-tax (Appeals ). The said action of the Assessing Officer was challenged by the assessee on two grounds, namely; (i) the issue being one of law, could not be the subject-matter of prima facie adjustment under section 143 (1) (a) of the Act and (ii) the concept of annual letting value under Sections 22 and 23 of the Act does not permit the Assessing Officer to assess the arrears of rent for more than 12 months as the annual rent. The Commissioner, without going into the question whether the arrears of rent could be brought to tax while issuing intimation under Section 143 (1) (a) of the Act, deleted the addition on merits. Relying on the decision of the Calcutta High Court in Hamilton and Co. Ltd. Vs. Commissioner of Income-tax (1992) 194 ITR 391, the Commissioner came to the conclusion that the arrears of rent were to be assessed in the year to which they relate to and not in the year of actual receipt. The Commissioner observed that the proper course for the Assessing Officer was to take remedial action for bringing to tax the arrears of rent in the years to which they pertained.

( 5 ) BEING aggrieved, the Revenue carried the matter in further appeal to the Tribunal, but without any success. Hence the present appeal.

( 6 ) ASSAILING the order of the Tribunal, Ms. Prem Lata Bansal, learned senior standing counsel for the Revenue, has submitted that since the arrears of rent had accrued to the assessee by virtue of the agreement entered into on 1 August 1995, the date which fell within the relevant previous year, these had to be included in