Commissioner Of Income Tax Chennai v. S.m.anandvel (Huf) (Specified) 17 & 18 Singara Garden Iv Street, Chennai – 600 021

In the High Court of Judicature at Madras Dated: 01.03.2006 Coram The Honourable Mr.JUSTICE P.D.DINAKARANandThe Honourable Mr. JUSTICE P.P.S.JANARTHANA RAJA Tax Case (Appeal) No.260 & 261 of 2006& TCMP No.1284 of 2006 Commissioner of Income TaxChennai Vs. .... Appellant S.M.Anandvel (HUF) (specified)17 & 18 Singara Garden IV Street,Chennai – 600 021. .... Respondent Appeal under Section 260A of the Income Tax Act, 1961 againstthe order of the Income Tax Appellate Tribunal, Madras 'B' Benchdated 02.02.2005 in ITA Nos.74 and 75/Mds/94 for the assessment years1985-86 and 1986-87 against the order of the Commissioner of IncomeTax (Appeals) VIII Madras-34, dt:24.9.93 in ITA.No.18/89-90 CC IV(TMV) against the order of the Commissioner of Income Tax (Appeals)VIII, Madras-34 order dt:24.9.93 in IT Appeal.No.9/89-90 City CircleIV (Inv) against the order of Assistant Commissioner of Income TaxCity Circle IV (Inv) Madras against the order of AssistantCommissioner of Income-Tax, City Circle IV (Inv.) Madras-6 dated27.3.1989 G.I.12202/A/IV(Inv)47-002-HV-0239 IV(Inv) for 1985-86 &1986-87. For Appellant : Mrs. Pushya SitaramanJ U D G M E N T (Judgment of the Court was delivered by P.D.DINAKARAN,J) As against the order dated 02.02.2005 in ITA Nos.74&75/Mds/94for the assessment years 1985-86 and 1986-87 of the Income TaxAppellate Tribunal, the Revenue has preferred these appeals raisingthe following substantial questions of law: "1. Whether in the facts and circumstances of thecase, the Tribunal was right in not considering the groundraised by the revenue relating to the addition of incomefrom the house property at 100 AE Anna Nagar, Chennai?2. Whether in the facts and circumstances of thecase, the assessee's contention that the property at 100AEhttps://hcservices.ecourts.gov.in/hcservices/Anna Nagar, Chennai did not belongs to him and the samebelongs to his wife is acceptable?" 2.1. The relevant facts are as follows:The assessee filed its return of income for the assessment year1985-86 on 30.9.1985 on a total income of Rs.91,530/-. Subsequently,he filed a revised return of income on 28.3.1988 admitting a totalincome of Rs.91,755/-. The difference being a sum of Rs.225/-between the original return and revised return represents theinterest admitted under the head "Other Sources". In the meanwhile,there was a search under Section 132 of the Income-tax Act (hereinafter referred to as the 'Act') on 27.1.1986 at the residence of theassessee and some incriminating materials in form of papers and bookswere seized. Based on those documents, it was found that a sitemeasuring one ground and 825 sq.ft. bearing D.No.AE 100 (formerly AC100) Anna Nagar, Madras was purchased on 1.5.1981 at a cost ofRs.45,000/- from one Sri Srinivasa Raju Iyengar in the name of Smt.Manomani, wife of the assessee incurring a sum of Rs.6,352/- towardsstamp duty and registration charges. Thus the total cost of the plotcomes to Rs.51,352/-. Thereafter, in March 1983, a house wasconstructed in the said plot with the cost of Rs.2,04,274/- inclusiveof the cost of wooden almirah. The total built-in area was 1100sq.ft.. 2.2. According to the Revenue, the wife of the assessee, Smt.Manomani did not have any regular source of income and therefore thesaid land and building, referred to above, was considered to be thatof the assessee under Section 22 of the Income Tax Act and thus theincome from the said property was computed at Rs.35,354/- afterdeducting a sum of Rs.1,046/- towards Municipal Tax and Rs.3,600/-towards expenses allowed under Section 23(2) of the Act, taking intoconsideration that the assessee and his wife were living in 1/3rdportion of the property and 2/3rd portion of the property was letout. The said income was treated as income from house property. 2.2. According to the Revenue, the wife of the assessee, Smt.Manomani did not have any regular source of income and therefore thesaid land and building, referred to above, was considered to be thatof the assessee under Section 22 of the Income Tax Act and thus theincome from the said property was computed at Rs.35,354/- afterdeducting a sum of Rs.1,046/- towards Municipal Tax and Rs.3,600/-towards expenses allowed under Section 23(2) of the Act, taking intoconsideration that the assessee and his wife were living in 1/3rdportion of the property and 2/3rd portion of the property was letout. The said income was treated as income from house property. 2.3. For the assessment year 1986-87, the assessing officerassessed the total income under the head "Income from house property"at Rs.37,432/- taking into consideration the detailed reasons givenin the assessment order for the assessment year 1985-86. 2.4. Aggrieved against the orders of the assessing officer evendated 27.03.1989, the assessee preferred appeals before theCommissioner of Income Tax (Appeals), who taking into account thedeletion of rent payment claimed to Smt. Manomani, wife of theassessee with regard to the assessment years 82-83 and 83-84, allowedthe appeals for the assessment year 1985-86 and 1986-87 by orderseven dated 24.09.1993, which was also confirmed by the Income TaxAppellate Tribunal on appeals at the instance of the Revenue. 3. Not satisfied with the order of the Tribunal dated02.02.2005, the Revenue has preferred these appeals raising thesubstantial questions of law, referred supra. 4. Mrs.Pushya Sitaraman, learned counsel appearing for theRevenue submits that the assessee is the owner of the the impugnedhttps://hcservices.ecourts.gov.in/hcservices/property, namely, AE 100, Anna Nagar, Madras, within the meaning ofSection 22 of the Act, even though the said property stands in the name of his wife, Smt. Manomani. She further submits that theTribunal as well as the Commissioner of Income Tax (Appeals) erred indeleting the additions of income from the house property, namely, AE100, Anna Nagar, Madras in the returns filed by the assessee for theassessment years 1985-86 and 1986-87. 5. From the above facts, it is clear that the first question oflaw is nothing but in consequence to the second question of law.Even though the owner means a person who has got valid title legallyconveyed to him after complying with the requirements of law such asTransfer of Property Act, Registration Act etc. and in the contextof Section 22 of the Act, having regard to the object of the Act,namely, to tax the income, the owner is a person, who is entitled toreceive income from the property in his own right and also the amountinvested in the purchase of plot and construction of a house in thename of the assessee's wife, had come from the assessee andtherefore, the income from such property is taxable in the hands ofthe assessee, since the Tribunal in the instant case rendered a clearfinding that the Revenue failed to prove that the said property waspurchased by the assessee in the name of his wife, the assessee'swife alone is the real owner, the Commissioner of Income Tax(Appeals) as well as the Tribunal rightly held that the income fromthe said house property, namely, AE 100, Anna Nagar, Madras is nottaxable in the hands of the assessee. The relevant portion of theorder of the Tribunal reads as follows: "As seen from the order of the lower authorities, theproperty belonged to the assessee's wife and the paymentof rent is not in dispute. The only objection of theRevenue is that the assessee's wife does not have anysource of income. It does not mean that the propertybelongs to the assessee. It is for the Revenue to showthat the property was purchased by the assessee in thename of his wife. Unfortunately, the Revenue has nomaterial to show that the property belongs to theassessee. Since the genuineness of the payment is not indispute, we do not find any infirmity in the order of thelower authority. Accordingly, we confirm the same." 6. In view of the above the concurrent findings of theauthorities, that the Revenue failed to prove the genuineness of thepayment by the assessee's wife, it cannot be said that the propertybelongs to the assessee within the meaning of Section 22 of the Actand merely because, the assessee's wife did not have anysource of income, which by itself does not mean that the propertybelongs to the assessee, we do not see any question of law much lesssubstantial question arises for our consideration. Accordingly, both the appeals stand dismissed. Consequently, TCMP No.1284 of 2006 isalso dismissed. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarslTo1. The Assistant Registrar,Income Tax Appellate Tribunal Madras Bench "B" Rajaji Bhavan, Besant Nagar, Chennai-90.2. The Commissioner of Income Tax (Appeals-VIII), Madras-343. The Assistant Commissioner of Income-tax, City Circle-IV (Investigation), Madras – 6.one cc to Mr.Pushya Sitaraman, advocate (SR.No.10069)T.C.(A) No.260 & 261/06& TCMP No.1284 of 2006sky/2/5