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The Tax Publishers P.G. & W. Sawoo (P.) Ltd. v. Asstt. CIT [Special Leave to Appeal No. 6384 of 2009, dt. 19-4-2016] : 2016 TaxPub(DT) 2239 (SC) Validity of Re-assessment consequential to rent revision with retrospective effect *Facts:* Assessee had let out properties on rent to Govt. of India. The said rent was revised upwards in 1994 with retrospective effect from 1987. The returns of assessment year 1989-90 was thus re-opened by the assessing officer to re-assessee the retrospectively enhanced rent. The re-assessment was questioned on the plea that the assessee could no have visualized increase in rent in 1988-89 financial year or the retrospective application and at that point in time no income accrued or arose to the assessee. It was only in 1994 that the income arose for the earlier period of the enhancement done. Thus the reassessment was invalid. This came up for hearing at the Apex court. Held in favour of the assessee that no rent/income arose in assessment year 1989-90 on account of the increase the rent accrued only in 1994 when the right to receive the same was established/crystallized. Thus the reassessment was invalid.

The Tax Publishers

P.G. & W. Sawoo (P.) Ltd. v. Asstt. CIT [Special Leave to Appeal No. 6384 of 2009, dt. 19-4-2016] : 2016 TaxPub(DT) 2239 (SC)

Validity of Re-assessment consequential to rent revision with retrospective effect

Facts:

Assessee had let out properties on rent to Govt. of India. The said rent was revised upwards in 1994 with retrospective effect from 1987. The returns of assessment year 1989-90 was thus re-opened by the assessing officer to re-assessee the retrospectively enhanced rent. The re-assessment was questioned on the plea that the assessee could no have visualized increase in rent in 1988-89 financial year or the retrospective application and at that point in time no income accrued or arose to the assessee. It was only in 1994 that the income arose for the earlier period of the enhancement done. Thus the reassessment was invalid. This came up for hearing at the Apex court.

Held in favour of the assessee that no rent/income arose in assessment year 1989-90 on account of the increase the rent accrued only in 1994 when the right to receive the same was established/crystallized. Thus the reassessment was invalid.