Income Tax Ordinance (XXXI of 1979)---

----S. 19---Income from house property---Self-requisition of house by the owner---Amount of rent received by the assessee on account of self- requisitioned property was not treated by the Tribunal as income from house---Validity---Tribunal had wrongly concluded that the provision of S.19(3) of the Income Tax Ordinance, 1979, did not apply to the occupation of property by an owner after it had been leased out by him to his employer---Reference was answered in negative.

1989 PTD (Trib.), 917 ref.

Muhammad Ilyas Khan for Appellant. Nemo for Respondent.

Date of hearing: 29th January, 2002.

JUDGMENT

NASEEM SIKANDAR, J.---This is a case stated by the Lahore Bench of the Income-tax Appellate Tribunal, under section 136(1) of the Income Tax Ordinance, 1979. The following question has been framed for our consideration and opinion:---

"Whether the Income Tax Appellate Tribunal was justified in holding that the amount of rent received by the assessee on account of self-requisitioned property could not be treated as income from house property?"

2. According to the statement of the case, the respondent is an assessee who was provided rent-free accommodation by his employer Messrs National Bank of Pakistan which was owned by him.

3. The Assessing Officer treated the rent received from the employer as income from property in the hands of the assessee and accordingly made an addition at Rs. 33,166 on that account.

4. The assessee-respondent succeeded in first appeal. The learned CIT(Appeals) relying upon a reported judgment of the Income-tax Appellate Tribunal cited as 1989 PTD (Trib.) 917 proceeded to delete the aforesaid addition.

5. On departmental appeal, learned Tribunal keeping in view their expression of the matter in the said reported decision proceeded to reject it. Thereafter, while accepting reference application it was noted that the law having been changed in the meanwhile after addition an explanation to subsection (3) in section 19 of the Income Tax Ordinance 1979, the matter needed to be referred to this Court. Hence this reference.

6. After hearing the learned counsel for the Revenue, we are of the view that the answer to the aforesaid question has to be in the negative. Particularly after the aforesaid amendment made through Finance Act, 1996 whereby an explanation was added to subsection (3) of section 19 of the Ordinance and was made retrospective in effect. It read as cinder----

For the purpose of this section, any property, the owner of which is in receipt of any rent, whether in cash or otherwise, whether from employer or otherwise, shall not be taken to be in the occupation of such owner for the purpose of his own residence,

7. Therefore, the view expressed by the Tribunal through the aforesaid reported judgment and followed in the case in hand has lost its efficacy. Even otherwise we do not subscribe to the various reasons given by the learned Tribunal in that judgment to conclude that subsection (3) of section 19 of the Ordinance did not apply to the occupation of a property by an owner after it had been leased out by him to his employer. However, as suggested by the learned Tribunal at the end of the order the Legislature having amended law suitably our answer to the question is in the, negative.

8. Answered in the negative.

Q.M.H./M.A.K./C-150/L

Reference answered.