V.G. Oak, C.J. - (1.) THIS is a reference under Section 66(1) of the Indian Income-tax Act, 1922. Smt. Indermani Jatia was the assessee at all material times. The assessment years are 1957-58, 1958-59 and 1959-60. Her legal representative, Madhav Prasad Jatia, has been brought on the record.
(2.) THE assessee owned at Delhi a building known as Grand Hotel. She experienced much difficulty in collecting rent from her tenant, who occupied Grand Hotel. At the time of the assessment for 1956-57, the assessee was able to secure deduction under item No. 38 of the Government Notification No. 878-F dated March 21, 1922, as regards unrealised rent in previous years. THE assessee made similar claims for deduction under item No. 38 of the Government Notification No. 878-F dated March 21, 1922, at the time of assessment for the years 1957-58, 1958-59 and 1959-60. THE claim was not specifically made before the Income-tax Officer. A claim was made in appeal before the Appellate Assistant Commissioner. He declined to recognise the claim made at such a late stage. When the matter went before the Tribunal in further appeal, the Tribunal permitted the assessee to raise the point before it. On merits it was urged for the department that, in view of the deduction made for the assessment year 1956-57, no further deduction could be claimed for the assessee for the subsequent years. This contention advanced on behalf of the department was not accepted by the Tribunal. THE Tribunal took the view that the claim could properly be made for deduction for the relevant assessment years in spite of the fact that a similar claim had been allowed in the assessee's favour in the year 1956-57. On this view, the Tribunal directed the Income-tax Officer to compute the total rent, which had become irrecoverable in respect of Grand Hotel property, and to the extent that it had not been exempted in previous assessment, it should be exempted for the year under assessment. Being dissatisfied with the decision of the Tribunal, the Commissioner of Income-tax, U.P., applied under Section 66(1) of the Act for a reference to court. In pursuance of that application, the Tribunal has referred the following question of law to this court: "Whether, on the facts and circumstances of the case, the assessee is entitled for each of the years under consideration to the exclusion from the income under the head 'Property' of any amount equal to the irrecoverable rent of the Grand Hotel property for one year which has not been so excluded in the preceding assessment ?" It is a little difficult to understand the scope of the question referred to the court. In paragraph 6 of the statement of the case the Tribunal observed that all the conditions necessary for invoking the exemption have been satisfied. If all the conditions for invoking the exemption are satisfied, it would appear that a case for exemption has been made out. Yet, the Tribunal has referred to this court the question whether the assessee is entitled to the exemption claimed by her. We take it that the question is whether, on the facts found by the Tribunal, the assessee is entitled to the benefit of item No. 38 of the Government notification.
(3.) THE Government notification dated March 21, 1922, runs thus: "THE following classes of income shall be exempt from the tax payable under the said Act...... (38) Such part of the income in respect of which the said tax is payable under the head 'Property' as is equal to the amount of rent payable for a year but not paid by a tenant of the assessee and so proved to be lost and irrecoverable, where- (a) the tenancy is bona fide ; (b) the defaulting tenant has vacated, or steps have been taken to compel him to vacate the property; (c) the defaulting tenant is not in occupation of any other property of the assessee; (d) the assessee has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or satisfies the Income-fax Officer that legal proceedings would be useless ; and (e) the annual value of the property to which the unpaid rent relates has been included in the assessed income of the year during which that rent was due and income-tax has been duly paid on such assessed income." We have pointed out that, according to the Tribunal, all the necessary conditions have been satisfied. We, therefore, take it that the conditions mentioned in Clauses (a) to (e) of item No. 38 of the Government notification have been fulfilled in the instant case. The question is whether the assessee is precluded from the benefit of the exemption on the short ground that a similar exemption was granted to the assessee for the assessment year 1956-57.;