Ajit Kumar Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment years 1982-83, 1983-84 and 1984-85, the following question of law has been referred to this court : " Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the loss under the head 'Income from house property' should be recomputed after allowing deduction of Rs. 96,000 under Section 24(1)(x) of the Income-tax Act, 1961, on account of unrealised rent subject to the condition that the loss so determined shall be restricted to the amount of loss claimed by the assessee ?"
(2.) Shortly stated, the facts are that the assessee-company in the three years under reference was the owner of house property at 31, Shakespeare Sarani, Calcutta. Gross rental income from the said property was returned at nil as the Soviet Consulate occupying the property did not pay any rent to the assessee. The original lease also stood expired on January 14, 1981. The Income-tax Officer did not accept the above contention of the assessee and estimated the annual letting value of the property at Rs. 96,000 for assessment under the head "House property income" in the three years under consideration. The assessee challenged the above order before the Commissioner of Income-tax (Appeals) but without any success.
(3.) Being aggrieved by the order of the Commissioner of Income-tax (Appeals), the assessee preferred separate appeals before the Appellate Tribunal. The Tribunal was of the view that, for the limited purpose of deciding the dispute in the assessment years before it, it was not necessary for the Tribunal to examine the contentions regarding the justification for determination of the annual value of the property at Rs. 96,000. Under Section 24(1)(x) of the Act, deduction of amounts in respect of rent from property let to a tenant which the assessee could not realise has to be allowed for computing the income from house property. The Tribunal addressed itself to the claim of deduction under the provision. The Tribunal found from the impugned order of the Commissioner of Income-tax (Appeals) that the assessee went to the High Court twice by way of writ to compel the Government of India to consider its application under Section 86 of the Civil Procedure Code to institute a suit against the Soviet Consulate. The Tribunal further observed that it was admitted that, after expiry of the lease, the assessee had not received any rent. So, the Tribunal held that the conditions for deduction under Section 24(1){x) were fulfilled. In the above view of the matter, the Tribunal held that the assessee was entitled to deduction of unrealised rent of Rs. 96,000 per year. The Tribunal, accordingly, directed that loss under the head " Income from house property " be recomputed after allowing deduction of Rs. 96,000 as unrealised rent from the income from house property in each of these assessment years subject to the condition that the loss so determined should be restricted to the amount of loss claimed by the assessee.;