N KUMARA RAO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The two questions referred are as follows :

(2.) The first question, therefore, is, what is the amount which the assessee contributed in the construction of the house ? The Tribunal, as a fact-finding authority, has recorded a finding that the assessee contributed Rs. 34,500. Though Sri Firdos, learned counsel for the assessee, seeks to contend that only a sum of Rs. 20,000 was contributed by the assessee and the rest of the amount was spent either from the Hindu undivided family or from the borrowings, we decline to go into the question for the reason that we cannot investigate in this reference questions of fact. The assessee did not seek any reference, nor did it file any application for calling upon the Tribunal to refer that question to this court. Section 64(1) (iv) of the Act postulates thus :

(3.) The next question is whether the Tribunal is justified in arriving at the ratio of 1 : 3. As stated earlier, the total amount invested for constructing the house is Rs. 96,502, out of which Rs. 10,000 was the amount invested by the wife of the assessee to purchase the plot, Rs. 3 4,500 was transferred by the assessee to his wife in the construction of the house and Rs. 52,000 was the amount which went into the construction from borrowings made in that regard. Section 64 of the Act has no application to outside borrowings. Therefore, the proportion in which the income derived from the property is to be apportioned is 10 : 34.5 : 52. Therefore, that part of the income attributable to 34.5 alone is taxable under section 64(1) (iv) of the Act. Instead, the Appellate Assistant Commissioner and the Tribunal wrongly apportioned the income in the ration of 1 : 3 and assessed 3/4ths of the income derived from the property in the hands of the assessee. That computation is clearly illegal. Therefore, the authorities are directed to compute the income in the above mentioned ratio and determine the taxable income of the assessee accordingly. The second question is answered accordingly. No costs.