LAWS(GJH)-1979-1-6

K D THAKAR Vs. COMMISSIONER OF INCOME TAX

Decided On January 29, 1979
K.D. THAKAR Appellant
V/S
COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

(1.) WE are concerned in this reference with three assessment years, viz., 1967 68, 1968 69 and 1969 70. Assessee, Kanaiyalal D. Thakkar, made a gift of Rs. 30,000 to his wife on February 2, 1963. Out of this amount of gift, the assessee's wife purchased a property for a sum of Rs. 28,000 on July 4,1963. This property was admittedly self occupied property. For asst. year 1967 68, the ITO did not include any income from the said property in the income of the assessee. Thereafter, the ITO initiated action under S. 154 of the IT Act, 1961, with a view to rectify the assessment for inclusion of a sum of Rs. 1,500 being the income from the said property. The assessee, at that time, did not object to the rectification of the order but submitted that the property income includible would be nil as the assessee's wife had no other income having regard to the proviso to s. 23(2) and, therefore, the value of the said property should be taken as nil. This contention of the assessee did not find favour with the ITO, who was of the opinion that in the past, that is, in asst. yr. 1965 66, the income from the property was included which was not objected to by the assessee. He, therefore, included a sum of Rs. 1,500 on that account for the assessment years under reference in the income of the assessee under S. 64(1)(iv) of the ITAct, 1961. The assessee being aggrieved by the said order, went in appeal before the AAC. Same contention was reiterated before the appellate authority that having regard to the proviso to S. 23(2), income from self occupied property is to be computed in the hands of the wife subject to a maximum value of 10per cent of the other income of the owner of the property, and that the income from house property could be included in the hands of the assessee under S. 64(1)(iv) of the IT Act, 1961. The AAC accepted this contention and granted reduction of Rs. 1,500 for each of the asst. yrs. 1967 68 and 1968 69 and Rs. 1,803 for asst. year 1969 70.

(2.) THE Revenue, therefore, carried the matter in further appeal before the Tribunal. The Tribunal read the relevant provisions and also considered the decision of the Supreme Court in CIT vs. Maharaj Kumar Kamal Singh 1973 CTR (SC) 181 : (1973) 89 ITR 1 and the decision of the Calcutta High Court in B. K. Guha, I.C.S. (Retd.) vs. CIT (1972) 84 ITR 592 and the decision of the Madras High Court in R. Ganesan vs. CIT (1965) 58 ITR 411. The Tribunal held, having regard to the observations contained in the decision of the Supreme Court in Maharaj Kumar Kamal Singh's case (supra), that once the income from house property is includible in the hands of the assessee, as a necessary corollary the annual value of the assessee's residential house has to be computed at 10per cent of the other income of the assessee. At the instance of the assessee, therefore, the following question is referred to us for our opinion :

(3.) IT should be recalled that S. 27 is a definition clause which defines various terms for purposes of computing income from house property under ss. 22 to 26. Sec. 27(i) defines who is the owner of a house property by a deeming fiction. It provides as under :