JUDGMENT
A. Raghuvir, C.J.
1. This reference is made at the instance of a partnership firm run in the name and style of Saligram and Co. at Dibrugarh. The subject-matter of the reference is a two-storeyed house at Mancotta Road of Dibrugarh town purchased by the firm in 1968 for business purposes. The house property of the firm is in two floors and measures in each floor 3,388 square feet. The first floor is occupied by two partners of the firm for residential purposes. The second floor is let out to two sister concerns, Saligram Premsukh and Co. and Saligram and Co. (P.) Ltd., who paid a rent of Rs. 6,000.
2. The Income-tax Officer, in the assessment order for 1973-74, added Rs. 12,000 rent as regards the first floor and Rs. 6,000 for the second floor as income of the firm. The firm disputed the amount of Rs. 12,000 but did not dispute the rent of Rs. 6,000. The Appellate Assistant Commissioner, on appeal, confirmed the order of the ITO. On further appeal, the Tribunal remitted the subject-matter for recomputation of rent of the first floor. This order of the Tribunal we will refer to as the first order of the Tribunal. After remand, the Income-tax Officer added Rs. 18,000 as rent derivable from the first floor. The Appellate Assistant Commissioner, barring minor details as to deduction of municipal taxes and land revenue, confirmed that order. On further appeal, the Tribunal dismissed the appeal. This order we will call it as the second order of the Tribunal.
3. At the instance of the assessee, the following question is referred under Sub-section (1) of Section 256 of the Act:
“Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the occupation of a part of the building which was owned by the firm and otherwise exclusively meant for
business purposes and notional income therefrom was assessable as income from house property under Section 23 of the Income-tax Act, 1961 ?”
The answer to the question referred is to be found in Section 22 of the Income-tax Act which reads as under :
“22. Income from house property.–The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax shall be chargeable to income-tax under the head ‘Income from house property’.”
The house referred to in the section, if it is not occupied for business or professional purposes, the income referable to such occupation is to be treated as income from house property. That is the meaning of Section 22. In the instant case, the two tenants of the firm paid Rs. 6,000 as rent and that amount was added without any demur as the income from house property, The assessee disputed Rs. 18,000 as the annual letting value of the first floor as it was occupied by two partners for business purposes. This issue was answered against the firm by the Revenue authorities. The correctness of that decision is assailed in the instant question by the assessee.
4. There was a controversy before the Tribunal while the second order was being passed : Whether the issue was decided in the first order of the Tribunal. The Revenue contended it was decided in the first order of the Tribunal. The assessee contended to the contrary. In the second order, the Tribunal held that such a decision was “impliedly” reached in the first order and later in the same order differently. There is, for a while, a like controversy is raised in this court. The two orders of the Tribunal do raise an unseemly situation and leave much to be desired.
5. Whenever controversies of such a nature are raised, what is the practice to be followed is indicated in Karnani Properties Ltd. v. CAT (1971] 82 ITR 547. The Supreme Court held that in the event of a controversy on facts, the statement of the case is to be accepted as correct, In that case, it was held that neither the High Courts nor the Supreme Court Can question the correctness of the statements of fact. In the instant case, it is held that the Tribunal, in their first order, did not decide the issue. The controversy ends with that statement.
6. There is yet another unseemly controversy in the case. The Revenue argued as a question of fact in the second order that the first floor was not used for business purposes and relied on the following passage : “Firstly,
the Tribunal already considered this matter and has given directions in such manner so as to lead to the conclusion that it had, for all practical purposes, decided that the annual letting value of the portion occupied by the partners should be assessed as income from property. Secondly, this, in our opinion, is also the correct position of law. The living of partners is always necessary for their efficient running of business and for that they require decent residence.” The assessee points out the emphasised portion of the above passage and argued that the first floor was occupied for business purposes. The attempt by the Revenue is to show that, as a fact, it was held that the house property was not occupied for business purposes and, therefore, there is no error in the ascertainment of the sum of Rs. 18,000 as rent for the first floor. Learned counsel for the assessee argued that the Tribunal erred in ascertaining the rent after it was held that the first floor was occupied by the partners for attending to the business of the firm.
7. The Tribunal, we hold in the instant case, inferred on the facts that the first floor of the building was not used for business purposes. The correctness of the inference at the instance of the firm is referred to this court. We may here recount that all inferences drawn from facts do not always raise questions of law. See Nafar Chandra Pal v. Shukur [1918] 45 IA 183 (Cal). But inferences drawn from mixed questions of fact and law invariably do raise questions of law : Herbert v. Samuel Fox and Co. Ltd. [1916] 1 AC 405. The instant case is of the latter type.
8. The instant house property is a business house as it was purchased for business in 1968. The house, therefore, was not intended for residential purposes. The two partners, to repeat; are in occupation of the first floor. These are the basic facts in the case. Whether the residence of two partners in the first floor is to be inferred for business purposes or not is the issue. The Tribunal inferred that the occupation of the two partners of the first floor is not for business purposes. The inference drawn is assailed in the instant question.
9. In all like situations, one aspect should always be borne in mind. It is the Tribunal that is charged with the duty to decide whether the inference drawn is a question of fact or a question of law. Once the Tribunal refers the question, it, is accepted that a question of law is referred : Sree Meenakshi Mills Ltd, v. CIT [1957] 31 ITR 28 (SC). Thus, there is a built-in presumption in the reference when made by the Tribunal.
10. In this case, a large number of authorities were cited by the Revenue and the assessee. In CIT v. Delhi Cloth and General Mills Co. Ltd. [1966] 59 ITR 152, the Punjab High Court held on facts that the house property was occupied for the business of the assessee. In CIT v. National Newsprint and Paper Mills Ltd. [1978] 114 ITR 388, the Madhya Pradesh High Court held that tenements were occupied for business purposes. In CIT v. Rasiklal Balabhai [1979] 119 ITR 303, the Gujarat High Court held that a godown was occupied for business purposes. The Delhi High Court in D. L. F. Housing and Construction (P.) Ltd. v. CIT [ 1983] 141 ITR 806 held at page 809 that the fact that the house was occupied for business purposes was not proved. Instances thus can be multiplied.
11. We see from the facts of the case that the Income-tax Officer found that the business of the firm was to deal in motor vehicles, in Ambassador cars, Bedford trucks, tractors, motor cycles, scooters, refrigerators, motor parts and also to run a motor repairing garage in the premises of the house property. Counsel for the assessee on the same facts argued that the asses-see dealt in motor parts and motor repairs and repairs work associated with the garage including washing and overhauling of motor vehicles. Such a business required the attention of the firm round the clock and, therefore, the two partners occupied the first floor to attend to the work of the assessee-firm.
12. Whether two partners should attend to the work or one is enough to attend to such a work and whether the first floor is to be occupied by them for attending to the work, it is for the proprietor of the firm to decide. As a matter of fact, it is not denied that the two partners were attending to the work indicated earlier. As we have indicated in the prefatory part of the order, the issue raised is founded on fact and law and, in our consideration on the facts, it is more probable to infer that the house property was occupied by the partners for business purposes.
13. In that view, the question referred is answered in the negative, in favour of the assessee and against the Revenue. No costs.
M. Sarma , J.
14. I agree.