Back
1973 Supreme(J&K) 22
IN THE HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
S. Murtaza Fazl Ali,D.D. Thakur, JJ.
Addl. Commissioner Of Income-Tax Punjab, J&K etc. - Appellant
Versus
Maharaj Kumar Vikaramaditya Singh & Anr. - Respondent
ITR No. 3/1972
Decided On : 12 April, 1973
Advocate For Appellant: J.N. Bhan
Advocate For Respondent: R.C. Dhawan
The deduction under S. 24(1)(viii) of the Income-tax Act, 1961 is allowed only for expenses incurred by the assessee, and that expenses incurred by another person, even if on the assessee's behalf, are not deductible.
Headnote:
INCOME TAX ACT, 1961 - S. 24(1)(VIII) - COLLECTION CHARGES - INTERPRETATION - DEDUCTION ALLOWED ONLY FOR EXPENSES INCURRED BY ASSESSEE - EXPENSES INCURRED BY ANOTHER PERSON, EVEN IF ON ASSESSEE'S BEHALF, NOT DEDUCTIBLE.
Fact of the Case:
The assessees, Maharajkumar Vikramaditya Singh and Maharani Yashorajya Lakshmi, claimed deductions for collection charges incurred by their husband, Dr. Karan Singh, a separate assessee, for the assessment years 1968-69 and 1969-70. The Income-tax Officer and the Appellate Assistant Commissioner disallowed the deductions, but the Tribunal allowed them, holding that the expenses were actually incurred for the purpose of collection of rent and that the words "by the assessee" were not mentioned in S. 24(1)(viii) of the Income-tax Act, 1961.
Finding of the Court:
The High Court held that the interpretation put by the Tribunal on S. 24(1)(viii) was legally erroneous. The Court held that the deduction under S. 24(1)(viii) is allowed only for expenses incurred by the assessee, and that expenses incurred by another person, even if on the assessee's behalf, are not deductible.
Issues: Whether the Tribunal was right in law in allowing the assessees' claims for deduction of collection charges incurred by their husband, Dr. Karan Singh, a separate assessee.
Ratio Decidendi: The Court held that the deduction under S. 24(1)(viii) is allowed only for expenses incurred by the assessee, and that expenses incurred by another person, even if on the assessee's behalf, are not deductible. The Court reasoned that the deduction is given by the statute to the assessee because he spends an amount of money for the purpose of preserving his property or deriving income from it, and that the deduction is purely personal to the assessee and has a clear relation to the expenses incurred by the assessee and not by any other person.
Final Decision: The Court answered the references in the negative, holding that the assessees were not entitled to claim deduction under S. 24(1)(viii) of the Income-tax Act, 1961.
Reference No. 3 of 1972 relates to the assessment of Maharajkumar Vikramaditya Singh, the minor son of Dr. Karan Singh. Reference No. 6 of 72 relates to the assessment of the income of Maharani Yashorajya Lakshmi, wife of Dr. Karan Singh. Both the assessees are individuals having their separate income from properties and other sources and their incomes have been assessed separate from that of Dr. Karan Singh.
lThe assessment which is the subject-matter of the two references pertained to the assessment years 1968-69 and 1969-70, for which the accounting years ended on 31-3-68 and 31-3-69. The assessee, Maharani Yashorajya Lakshmi, filed her returns for both these years declaring incomes from property and interest at Rs. 71,919 and Rs. 89,420 respectively. In her return the assessee claimed collection charges of Rs. 4,529 and 4,404 against income from property known as Bangalore House Ranbir Mahal and Bombay fiat for the assessment years 1968-69 and 1969-70 respectively. Similarly the assessee, Maharajakumar Vikramaditya Singh, filed a return of his income for the assessment years 1968-69 and 1969-70 declaring his income from property and interest at Rs. 59,945 and Rs. 47,670 respectively. Here also the assessee claimed collection charges of Rs. 4,135 against income from property known as Usha Kiron at Bombay and Ghulab Bhawan at Srinagar, for the assessment year 1968-69. He further claimed collection charges of Rs. 4.032/-for the assessment year 1969-70. The Income-tax Officer disallowed the deductions of both the assessees who went up in appeal to the Appellant Asstt. Commr. who also affirmed the order of the Income-tax Officer. Thereafter the assessees tiled an appeal before the Tribunal. The Tribunal appears to have taken a different view and came to the conclusion that in view of the fact that the expenditure was actually incurred for the purpose of collection of rent, the assessees were entitled to the deductions as claimed. The Tribunal accordingly allowed the appeals as also the deductions. In passing this order the Tribunal gave the following findings in both the cases: -
(1) That the expenditure was incurred.
(2) That the expenditure was incurred for collection.
(3) That the expenditure was incurred not by the assessee herself but her husband, who is a separate assessee.
(In other words the Tribunal found that in the case of the assessee Maharajkumar vikramaditya Singh, the expenditure was incurred not by the assessee himself, but by his father, who is a separate assessee).
The department then filed an application before the Tribunal for making a reference to this Court and hence the following point of law has been referred to this Court for decision: -
In the case of Maharajkumar: -
"Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing Rs. 4,135/- and Rs. 4.032/-as collection charges in respect of the assessees income from house property for the assessment years 1968-69 and 1969-70 respectively."
In the case of the Maharani: -
"Whether on the facts and in the circumstances of the case the Tribunal was right in law in allowing Rs. 4,529/- and Rs. 4,404/- as collection charges in respect of the assessees income from house property for the assessment years 1968-69 and 1969-70 respectively."
2. The learned Tribunal took great pains in tracing the history of the rules of interpretation of fiscal statutes with reference to original text books as also a number of authorities, and came to the conclusion that fiscal statutes should be strictly interpreted giving every benefit of doubt to the subject. The Tribunal further found that as the words by the assessee are not mentioned in S. 24(1) (viii) of the Income-tax Act, therefore once it is proved that expenses had been incurred by anybody for collection of rent, the assessees were entitled to
