Sikri, J. - (1.) These two appeals by special leave are directed against the judgment of the High Court of Judicature at Madras in a reference made to it by the Income-tax Appellate Tribunal under section 66(1) of the Income Tax Act, 1922, hereinafter referred to as the Act. The following question of law was referred to the High Court :"Whether, on the facts and circumstances of the case, the rental income from the house property received by the assessee for the assessment years 1950-51 and 1951-52 is not exempt under section 4(3)(xii) of the Act notwithstanding section 10(7) of the Act -
(2.) The relevant facts are as follows : The appellant, Vanguards Fire & General Insurance Co., hereinafter referred to as the assessee, carried on fire and general insurance business. It owned a building of which a part was occupied by the assessee for its own business, the rest being let out on rent. During the previous year ending December 31, 1949 (assessment year 1950-51), the assessee received a sum of Rs. 8,230 as rent on the portion let out. In the accounting year ending December 31, 1950 (assessment year 1951-52), the rent received amounted to Rs. 37,200. The Income-tax Officer in view of section 4(3)(xii) of the Act excluded these amounts from assessment. The Commissioner of Income-tax issued a notice to the assessee under Section 33B of the Act to show cause why the orders of the Income-tax Officer should not be modified so as to set right the error committed by the Income-tax Officer in excluding these sums from assessment. After hearing the assessee, he held that "it is only income which is chargeable under the head income from property which is entitled to the exemption laid down in this clause and not income chargeable under the Schedule in the case of insurance companies." The assessee appealed to the Income-tax Appellate Tribunal which upheld the order of the Commissioner of Income-tax. The Tribunal observed : "The exemption under section 4(3)(xii) is to the income received from property and as the income in the instance case is from insurance business, the assessee cannot lay claim to any exemption under this sub-section. Further the Schedule in dealing with life insurance makes some mention of income from property (section 9), while the absence of any such mention in general insurance is significant."
(3.) At the instance of the assessee, the Appellate Tribunal stated a case and referred the question reproduced already. The High Court answered the question in the affirmative and against the assessee.;