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Signing of instrument of conveyance doesn't raise any presumption of income to be assessed in hands of other co-owner: HC
The assessee and her husband had joint ownership of a property. Assessing Officer (AO) held that the property would be liable to be viewed as being jointly owned in equal share by the assessee and her spouse and thus taxed in accordance with section 23(1)(a). Accordingly, he computed the annual letting value and 50 per cent thereof being assessed in the hands of the assessee.
On appeal, the Commissioner (Appeals) affirmed the order of the Assessing Officer. Later, the Tribunal also affirmed the view holding that since co-ownership of assessee and her husband was evidenced in sale deed but there was no specification of their respective shares in deed, it must be held that husband and wife purchased equal shares.
The matter reached before the Delhi High Court.
The Delhi High Court held that section 26 speaks of apportionment and ascertainment of the extent of income that can arise in an assessee's hands in cases where the respective shares are defined or are ascertainable. Section 27 also defines as to what meaning is to be ascribed to the expression ''owner of house property.
As is manifest and evident from a reading of provisions, the Income-tax Act fails to raise any presumption in law of income necessarily arising or being liable to be assessed in the hands of an individual merely because it be a signatory to an instrument of conveyance.
The question of taxability would necessarily have to be answered bearing in mind the individual who had in fact obtained benefits from the property. In the absence of any finding in tune with the above having been rendered insofar as the assessee is concerned, the order of the Tribunal cannot be sustained. Accordingly, the instant appeal was allowed, and the order of the Tribunal was set aside.
Income Tax Bill 2025 - A Great Opportunity?
The Income Tax Bill 2025 (ITB 2025) has been tabled in parliament on 13th February 2025, with an objective to repeal the current Income Tax Act 1961 (ITA 1961) and is expected to come into effect from 1 April 2026.
Over the past 64 years since its legislation, the ITA 1961 has undergone over 4,000 changes through amendments by inserting new sections, chapters, amended sections, clauses, subclauses, provisos, explanations and heavily litigated to get some landmark decisions favoring both the assessee and the revenue.
As per the government, the ITB aimed to make the Act concise, lucid and easy to understand. The ITB proposes to eliminate redundant provisions and reduce the length of the act by nearly half
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