COMMISSIONER OF INCOME TAX, CALCUTTA versus M/S. PARK HOTEL (P) LTD., 15, PARK STREET, CALCUTTA-16

Citation: [1996] 1 S.C.R. 170 · Decided: 05-01-1996 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
c 
COMMISSIONER OF INCOME TAX, CALCUTTA 
v. 
M/S. PARK HOTEL (P) LTD., 15, PARK STREET, CALCUTTA-16 
JANUARY 5, 1996 
[B.P. JEEVAN REDDY AND S.B. MAJMUDAR, JJ.J 
Income Tax Act, 1961 : 
Ss. 142, I 43, 256( I Hssessment--Assessee Company subleasing the 
leasehold properties under an unregistered lease deed to another associate 
co1npany--Rental inco1ne releived from lease hold properties--Assessntent 
of-Tribunal 1naking a referenc;e to High Court-High Court answerilzg the 
reference in .favour of assessee--Held, neither the reference clar~fied the issues 
nor the High Court addressed itse(f to the 111ain issue regarding effect o.f sub-
lease under an unregistered lease deed--!vlatter re1nitted back to High Court 
D for decision qf reference afresh. 
E 
F 
G 
The assessee, A lessee of certain properties, sub-leased a portion of 
the said properties under an unregistered deed to another company, namely 
'SOL' which was associated with the assessee-company. The rental income 
received from the sub-leased property was sought to be taxed in the hands 
of'SOL' as 'income from house property', which was objected to by 'SOL' 
on the ground that it was not the owner of the said property. The .matter 
was ultimately decided by the Income Tax Appellate Tribunal in favour of 
'SOL'. 
Later, for the assessment years 1975-76 to 1979'.80, the rental income 
received by 'SOL' from the said sub-leased property was sought to be 
included in the income of the assessee. The assessee objected to it and filed 
an appeal before the Commissioner oflncome Tax (Appeals) who held that 
the income from the lease-hold property should be assessed under the head 
"business" and the in.come received from 'SOL' from the properties 
subleased to it should not be included in the total income of the assessee. 
The Revenue challenged this Order before the Tribunal, which held that 
the income received from leasehold property should be assessed as income 
from business and the income which has to be assessed as income from 
business from leasehold interest should be the income as received by 'SOL'. 
H 
At the instance of the assessee, the Tribunal made a reference to the 
170 
, 
COMMR. OF LT CALCUTT.A'· PARK HOTEL (P) LTD. [JEEVAN REDDY, l.] 
l 71 
High Court for decision of the question: whether the Tribunal was justified 
A 
in holding that the income as received by 'SOL' be assessed as income of 
the assessee from lease hold interest? The High Court answered the reference 
in favour of the assessee. Aggrieved, the Revenue filed the present appeal. 
Allowing the appeal and remitting the matter back to the High Court 
for fresh disposal of the reference, this Court 
HELD : It is not clear whether the question referred pertains only to 
one issue viz., whether the income received by '"SOL' should be included in 
the total income of the assessee, or does it also comprehend the other issue, 
B 
viz., whether the said income should be assessed under the head "income 
from house property" or under the head "profits and gains of business or 
C 
profession". Further, the High Court has not addressed itself to the main 
issue upon which the Tribunal had allowed the appeal of the Revenue, viz., 
inasmuch as the sub-lease was not effected under a registered document, 
interest in the property does not pass and, therefore, the income in question· 
continues to be the income of the assessee. It has also not dealt with the D 
reasoning of the Tribunal that by accepting the assessee's plea, the income 
in que.stion \vould go untaxed altogether inasmuch as the said income has 
been held not taxable in the hands of 'SOL'. [174-C-D; F-G] 
Shri Ganesh Properties Ltd. v. Comnzissioner of lncon1e-Tax, West Ben-
gal, 44 l,T,R. (1962) 606; Sakarchand Chhaganlal v. Controller of Estate Duty 
E 
Gujarat, 73 LT,R. (1969) 555; Bengal Jute Mills Co. Ltd. Calcutta v. 
Commissioner of Income-Tax, Central Calcutta, 17 I. T.R. (1949) 308 and S. G. 
Mercantile 
Corporation Private Limited v. Com1nissioner of Income-Tax, 
Calcutta, 83 I. T.R. (1972) 700, cited. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 195 of 1996. 
F 
From the Judgement and Order dated 18.9.86 of the Calcutta High Court 
in I.T.R. No. 88 of 1986. 
J. Ramamurthy, B.S. Ahuja and S.N. Terdol for the Appellant. 
A. K. Roy Chowdhury, Ms. Aruna Banerjee, R. Chatterjee and G.S. 
Chatterjee for the Respondent. 
The Judgment of the Court was delivered by 
B.P. JEEVAN REDDY, J. 1. Leave granted. Heard the counsel 

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