2016 (8) TMI 1229 - AT - Income Tax

Addition on account of rent of property belonging to daughter - proof of ownership - documentary evidence - Held that - Ownership right of the daughter of the assessee was not challenged even in preceding assessment years. In subsequent year, when daughter of the assessee became major, the assessee did not show her share in her return of income which have not been disputed by the revenue authorities. Returns for assessment years 2007-08 to 2010-11 have been filed by Ms. C. Sruthi Reddy, daughter of the assessee showing rental income of her share in her return of income which have not been disputed by the revenue authorities. Therefore, it is of the view assessee has been able to establish that 50% ownership of the property in question vests with the daughter of the assessee as per law and therefore, her share of income on account of rental income on attaining majority should be assessed in the hands of Ms. C. Sruthi Reddy only. The addition in the hands of the assessee is, therefore, wholly unjustified.- Decided in favour of assessee.

Summary

Issues:
Challenge to addition of rent on property belonging to daughter.

Analysis:
1. The appellant, an assessee, challenged the addition of rent on a property rented to State Bank of India, claiming 50% of the rent was in the hands of her daughter. The Assessing Officer asked for evidence of transfer, which the appellant failed to provide, resulting in the addition of ?1,16,640.

2. The appellant, during the appeal, submitted an agreement to sell executed with her daughter, but the Assessing Officer maintained the addition due to lack of evidence. The CIT(A) dismissed the appeal as the appellant failed to prove ownership of the property by her daughter, not submitting evidence despite opportunities.

3. The appellant argued that she acquired the property in 1987 and transferred half to her daughter in 1989, supported by various documents and her husband's property returns. The judge noted that the Assessing Officer did not object to the 1989 agreement but raised concerns about the lack of a registration deed.

4. The judge found the addition unjustified, as the appellant had provided sufficient evidence of transferring ownership to her daughter, as supported by past income tax returns and her husband's declarations. The judge emphasized that the daughter's ownership was not disputed in previous years, and the rental income should be assessed in her name.

5. Consequently, the judge set aside the lower authorities' orders and deleted the addition of ?1,16,640 in the appellant's hands, allowing the appeal.

This detailed analysis highlights the appellant's challenge, the lack of evidence provided initially, the submission of additional evidence during the appeal, and the judge's decision based on the presented documents and past tax returns, ultimately ruling in favor of the appellant.