- (1.) A reference has been made by the Hon'ble Division Bench on the question whether there is a direct conflict of decisions delivered by the Hon'ble Division Bench in the decision of Hope India Ltd. v. Commissioner of Income Tax, (239 ITR 740) and in the decision of Hamilton and Co. Pvt. Ltd. v. Commissioner of Income Tax, (194 ITR 391 ). The reference has been made to resolve the conflict between the said two decisions of the Hon'ble Division Bench. The matter has been referred before the Larger bench to resolve the conflict in respect of the said two decisions.
(2.) THE question relates to whether additional or extra rent attributable to preceding years of account which could not be taxed under Section 22 of the Act should be taxed under the head "income from other sources". The said question was decided by the Hon'ble Division Bench in the case of hamilton and Co. Pvt. Ltd. (Supra) when Their Lordships observed : "the question is whether the arrears of rent relating to another previous year are taxable as income from house property of the later previous year in which they were received. If the arrears of rent of past years are not part of the annual rent of the year of account in which such arrears are received, then the only rational interference should be that the annual rent or annual rents of the past year or years to which they pertain can be brought to charges only in the assessment years relevant to such past years of account. The receipt of the arrears of rent cannot, by any stretch of imagination, can be said to have shed their character as rent from property and to have ceased to be liable to tax as income from house property. The simple case is that the rent of a past year increased retrospectively shall be the annual rent of the year in which it is received consequent upon subsequent increase. "
(3.) THEREFORE, the Hon'ble Division Bench in the said decision of hamilton and Co. Pvt. Ltd. (supra) held that the receipt of arrears of rent cannot, by any stretch of imagination, can be said to have shed their character as rent from property and to have ceased to be liable to tax as income from house property. The simple case is that the rent of a past year increased retrospectively shall be the annual rent of the year in which it is received consequent upon subsequent increase.;