Monday, February 8, 2010
Rajasthan HC ruling on rent arrears irks SC
A Rajasthan High Court ruling, giving retrospective effect of the special provision for assessing arrears of rent provided under section 25 B of the Income Tax Act, has irked the Supreme Court. A bench comprising Justice SH Kapadia and Justice Swatanter Kumar on Friday took strong exception to the high court ruling on the issue. The high court had said that the provision of Section 25B of the Income Tax Act is clarificatory in nature and should be given retrospective effect. The apex court, however, said, such findings of the high court was uncalled for after hearing the plea of Dowager Maharani Residential Accommodation Welfare Amenities Trust. Advocate Pratap Venugopal on behalf the Trust, said the high court erred in arriving at such a conclusion when it was not the issue before the court. The high court failed to appreciate that the question or issue regarding section 25B of the IT Act did not at all arise out of the orders of the Appellate Tribunal (Income Tax Appellate Tribunal) and therefore, the high court did not have the jurisdiction under section 250 A of the IT Act to go into or decide that question , said the Trust in its Special Leave Petition. Section 25 B was inserted by the Finance Act 2000 which lays down that where the owner of the property received any amount, by way of arrears of rent from such property, the amount so received, after deducting a sum equal to onefourth of such amount for repairs of, and collection of rent from, the property, shall be deemed to be the income chargeable under the head income from house property as the income of the previous year in which such rent is received . This will be the position even if the assessee is not the owner of that property in the year of receipt of enhanced rent. It was made effective from April 1, 2001. However, the question was left open whether it can be applied retrospectively. The trust had let out its property to the department and derived rental income.
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