Back
HIGH COURT OF CALCUTTA
Sankar Prasad Mitra, A. N. Sen
B. K. GUHA, I. C. S. (RETD.) - Appellant
Versus
COMMISSIONER OF INCOME-TAX - Respondent
Income-Tax Reference 65 Of 1969
Decided On : APRIL 27, 1971
INCOME TAX - Transfer of assets - Income from house property - Whether income from house property transferred by assessee to his wife assessable in assessee's hands under Section 64 (iii) of the Income-tax Act, 1961 - Held, yes.
Fact of the Case:
The assessee's wife purchased a plot of land in New Alipore in 1941. She made a deposit of Rs. 2,000 in part payment of the price of the land which was obtained by raising a loan against the assessee's insurance policy. Before the land could be purchased, however, the Government requisitioned it. In or about June, 1950, the land was de-requisitioned. Thereafter, it was sold and a sum of Rs. 20,081 came to the assessee's wife's share. With Rs. 20,000 out of the aforesaid amount and with loan taken from insurance companies against the assessee's insurance policies and with a further small sum given by the assessee, a plot of land on Gariahat Road was purchased on November 28, 1950, from the Government of West Bengal for the sum of Rs. 29,292. A building was constructed on the land at a cost of approximately Rs. 57,500. This construction was financed by the assessee by withdrawals from his provident fund and the proceeds of his insurance policies. The construction was started in or about April, 1955. The ground floor was completed by the end of 1955 and the first and second floors by July, 1957.
Finding of the Court:
The Tribunal found that the assessee's wife was the assessee's benamidar and that the income had been rightly included in computing the assessee's total income.
Issues: Whether the income from the house property transferred by the assessee to his wife was assessable in the assessee's hands under Section 64 (iii) of the Income-tax Act, 1961.
Ratio Decidendi: The Tribunal went into the question whether the assessee's wife was the benamidar. The Tribunal found that there was no material to show that the assessee ever intended that his wife should not be the owner of his property and the allegation of benami had not been proved. The Tribunal then considered whether Section 27 was applicable and found that it did not apply. Thereafter, the Tribunal considered the applicability of Section 64 (iii) and held that the property was assessable in the assessee's hands by reason of the fiction therein enacted.
Final Decision: The court held that the income from the house property of the applicant's wife was assessable in the hands of the applicant under Section 64 (iii) of the Income-tax Act, 1961.
( 1 ) IN 1941 the assessee's wife entered into a contract with the Hindusthan Co-operative Insurance Society for purchase of a plot of land in New Alipore. She made a deposit of Rs. 2,000 in part payment of the price of the land which was obtained by raising a loan against the assessee's insurance policy. Before the land could be purchased, however, the Government requisitioned it. In or about June, 1950, the land was de-requisitioned. Thereafter, it was sold and a sum of Rs. 20,081 came to the assessee's wife's share.
( 2 ) WITH Rs. 20,000 out of the aforesaid amount and with loan taken from insurance companies against the assessee's insurance policies and with a further small sum given by the assessee, a plot of land on Gariahat Road was purchased on November 28, 1950, from the Government of West Bengal for the sum of Rs. 29,292.
( 3 ) A building was constructed on the land at a cost of approximately Rs. 57,500. This construction was financed by the assessee by withdrawals from his provident fund and the proceeds of his insurance policies. The construction was started in or about April, 1955. The ground floor was completed by the end of 1955 and the first and second floors by July, 1957.
( 4 ) THE income from this property was returned by and assessed in the assessee's hands for the first few years. In the original returns for the assessment years 1963-64 and 1964-65 the assessee included the incomes from this property. But subsequently he filed revised returns in which these incomes were not shown.
( 5 ) AT this stage we may conveniently set out the relevant provisions of Sections 22, 27 and 64 (iii) of the Income-tax Act, 1961. These provisions are as follows: section 22:"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' ". Section 27 :"for the purposes of Sections 22 to 26- (i) an individual who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child not being a married daughter, shall be deemed to be the owner of the house property so transferred;. . . . . "section 64:"in computing the total income of any individual, there shall be included all such income as arises directly or indirectly- -. . . . . (iii) Subject to the provisions of Clause (i) of Section 27, to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with an agreement to live apart;. . . . . "
( 6 ) IN this case counsel representing the assessee argued before the Income-tax Officer that under Section 64 (iii) the income arising to the assessee's wife in respect of the said property was nil inasmuch as the property was used as a dwelling house. The Income-tax Officer held that this was not a case of transfer of house property or asset by the assessee to his wife, that the house property was constructed out of the assessee's own money in the name of his wife, that the assessee was the real owner of the property and that his wife was merely a name-lender. The Income-tax Officer included the income from this property in the assessee's assessment for the assessment years 1963-64 and 1964-65.
( 7 ) THE Appellate Assistant Commissioner held that Section 27 (i) and Section 64 (iii) did not apply to this case. He agreed with the Income-tax Officer that the assessee's wife was the assessee's benamidar and that the income had been rightly included in computing the assessee's total income.
( 8 ) BEFORE the Tribunal the following contentions were urged on behalf of the assessee :1. U
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
