B.N. KRPAL, J.

In respect of the assessment years 1977-78 and 1978-79, the Income-tax Appellate Tribunal has stated the case and referred the following two questions to this court,

"1. Whether, on the facts and in the circumstances of the case, the honble Tribunal was legally correct in holding that the annual letting value of the club building is not assessable to income-tax under the head Income from property

2. Whether, on the facts and in the circumstances of the case, the honble Tribunal was legally correct in holding that the principle of mutuality applies to the property income and accordingly it is not taxable income of the assessee "

Briefly stated, the facts as found by the Tribunal are that the club owns an immovable property, viz., a club house. No rent is received by the club. The Income-tax Officer sought to invoke the provisions of section 22 of the Income-tax Act, 1961, and assessed the annual letting value of the club house to tax. An appeal was filed to the Commissioner of Incometax (Appeals ) but without success. A further appeal was filed to the Income-tax Appellate Tribunal. It appears that a similar question had arisen in respect of two earlier assessment years 1971-72 and 1973-74, wherein the Tribunal had come to the conclusion that no income was liable to tax in the hands of the assessee. For the present years also, the Income-tax Tribunal followed its earlier decision and came to the conclusion that the income from house property was not liable to tax. It is thereupon that, on an application from the Revenue, the aforesaid two questions have been referred to this court.

Section 22 of the Income-tax Act, 1961, inter alia, provides that the annual value of the property of which the assessee is the owner, other than such portions of the property which he may occupy for purposes of business or profession, is to be charged to tax under the head "Income from house property". It is not in dispute that, in the instant case, the assessee has not occupied the club premises for any business or vocation, the profits of which are chargeable to income-tax. This being so, the provisions of section 22 of thewill clearly applyThe respondent-club has not let out its premises either to its members or to outsiders. It is not carrying on any business or profession in the said premises. The club premises are, therefore, in self-occupation of the club itself. Under section 22 of the Act, it is the annual value of the property which is subjected to tax and which, at the relevant point of time, did not necessarily have a direct relation with the rent which was actually received or could be received. The incidence of tax under section 22 is on the ownership of the building and it is for this reason that the Allahabad High Court, in the case of CIT v. Wheeler Club Ltd. 1963 (49) ITR 52 came to the conclusion that the provisions of section 9 of the Indian Income-tax, 1922 ( corresponding to section 22 of the 1961 Act ), were applicable in the case of a club. Even this court, in the case of CIT v. Delhi Gymkhana Club Ltd. 1985 (155) ITR 373 [LQ/DelHC/1985/235] , 1985 (48) CTR 208, observed that,

"Letting out of the premises is merely a provision of a facility for members. The principle of mutuality clearly applies to the surplus earned as a result of such activities. It may be that if the income can be treated as rent derived from house property, the rent or the income derived from house property will be assessable under section 22. That may be so because of the statutory fiction contained in section 22 of theand the scheme of the Income-tax Act that the income from the house property will be assessable on notional basis."

Our attention has been drawn to some of the decisions of different courts where conflicting views have been expressed in cases where rooms were let out by the club to its members. It is not necessary for us to advert to the said decisions because, in the present case, the club premises have not been let out by the assessee to its members and no rent has been charged from them. It is no doubt true that the club is charging subscription from its members but there is no rent relatable to the premises which is being realisedWe are in agreement with the conclusion of the Allahabad High Court in Wheeler Clubs case 1963 (49) ITR 52 [LQ/AllHC/1962/186] and, therefore, question No. 1 is answered in the negative and in favour of the Department.

Question No. 2 is also answered in the negative because the principle of mutuality does not arise in the present case because no money had arisen by way of rent and the provisions of section 22 of theare being applied because the property in question is in self-occupation.

There will be no order as to costs.