1987 (3) TMI 21 - HC - Income Tax

Annual Charge On Property, Clubbing Of Income From Transferred Property, Income Not To Be Included Twice

Summary

Issues:
1. Deduction under section 24(1)(iv) of the Income-tax Act, 1961.
2. Inclusion of amounts paid to the assessee's wife in the total income under section 64(1)(iii) and section 60 of the Income-tax Act, 1961.

Analysis:

Issue 1: Deduction under section 24(1)(iv) of the Income-tax Act, 1961:
The case involved the question of whether the assessee was entitled to a deduction of Rs. 12,000 under section 24(1)(iv) of the Income-tax Act, 1961. The assessee had executed a deed to pay his wife a sum annually out of his share in two properties. The court found that the provision was applicable to the case as the assessee had subjected his share to an annual charge for payment to his wife. The court relied on a previous judgment to support this interpretation, emphasizing that deductions under section 24 are available to co-owners based on their respective shares in the property. Therefore, the deduction claimed by the assessee was upheld, and the issue was decided in favor of the assessee.

Issue 2: Inclusion of amounts paid to the assessee's wife in the total income:
Regarding the inclusion of amounts paid to the assessee's wife in his total income under section 64(1)(iii) and section 60 of the Income-tax Act, 1961, the court examined the relevant provisions. Section 60 states that income arising from a transfer shall be included in the transferor's total income. However, the court noted that the amounts had already been considered in the assessment and allowing double taxation was impermissible. A similar case judgment was cited to support this reasoning, emphasizing that the same income cannot be taxed twice. Additionally, the court analyzed section 64(1)(iii) and concluded that since there was no transfer of assets to the wife, this provision was not applicable. Therefore, the court ruled in favor of the assessee, stating that the amounts received by the wife were not liable to be included in the total income of the assessee under section 60 or section 64(1)(iii) of the Income-tax Act, 1961.

In conclusion, the court answered the questions raised in the Income-tax References in favor of the assessee, allowing the deduction claimed under section 24(1)(iv) and rejecting the inclusion of amounts paid to the assessee's wife in his total income under section 60 and section 64(1)(iii) of the Income-tax Act, 1961.