2016 (7) TMI 1686 - AT - Income Tax

Valuation of Tenali house property - Real owner - assessment in whose hand? - CIT(A) has considered the value of the site as per the registered sale deed and as far as cost of construction of the building is concerned, has given 15% deduction by taking into consideration the local rates (PWD rates) and 10% deduction to self supervision, thus directed the A.O. to adopt the total value of the Tenali house property including site and construction - objection raised by the Ld. Counsel for the assessee in respect of assessment which has to be made in the hands of the assessee s wife - HELD HAT - After careful consideration of the assessment order and also order passed by the Ld. CIT(A), keeping in view of the specific observations made by the ITAT that there is no evidence of record which suggest that assessee s wife had some independent source of income. It is trite law that in the case of house wife, it is the customary practice of house holder to purchase property in the name of the wife, particularly when lady is a house wife and no regular source of income is proved. A.O. keeping in view of the observations made by the ITAT, called the assessee to explain the source of investment. The assessee s wife was not able to substantiate the source. Therefore, based the observation made by the Hon ble ITAT, assessment was completed. On appeal, the Ld. CIT(A) has given partial relief. We find that there is no infirmity in the order passed by the Ld. CIT(A). This ground of appeal raised by the assessee is dismissed. Loss incurred in business in the block assessment period for set off against the income - assessee has submitted that the loss incurred by the assessee in his business in the block assessment period may be set off against the income - HELD THAT - We find that the A.O. has passed the consequential order in respect of the construction of the Tenali House property keeping in view of the observations made by the Hon ble ITAT. From the ITAT order this issue is not emanating, therefore, this ground raised by the assessee cannot be adjudicated. Therefore, this ground of appeal raised by the assessee is dismissed.

Summary

Issues Involved:
1. Valuation of the Tenali house property.
2. Assessment of the property in the hands of the assessee's wife.
3. Set-off of business loss against income in the block assessment period.

Issue-wise Detailed Analysis:

1. Valuation of the Tenali House Property:
The case revolves around the valuation of the Tenali house property. The Assessing Officer (A.O.) valued the site at Rs. 2,74,848/- and the building at Rs. 5,50,000/-, totaling Rs. 8,24,848/-. The assessee contested this valuation, and the CIT(A) adjusted the site value to Rs. 85,630/- based on the registered sale deed and reduced the building valuation by allowing deductions for local rates and self-supervision. The CIT(A) finally directed the A.O. to adopt a total investment value of Rs. 5,33,430/- (Rs. 85,630/- for the site and Rs. 4,47,800/- for the building). The Tribunal upheld this decision, finding no infirmity in the CIT(A)'s order.

2. Assessment of the Property in the Hands of the Assessee's Wife:
The assessee argued that the property should be assessed in the hands of his wife, who purportedly purchased the land and constructed the house. However, the Tribunal noted that there was no evidence of the wife having an independent source of income. Following the legal maxim "husband and wife are considered one person in law," especially when the wife is a housewife with no regular income, the Tribunal upheld the CIT(A)'s decision to assess the property in the hands of the assessee.

3. Set-off of Business Loss Against Income in the Block Assessment Period:
The assessee sought to set off business losses incurred during the block assessment period against the income. The Tribunal noted that this issue was not part of the original appeal and was not addressed in the consequential order passed by the A.O. following the directions of the ITAT in IT(SS)A No.99/Vizag/2002. Consequently, the Tribunal dismissed this ground, stating it could not be adjudicated in the current appeal.

Conclusion:
The appeal filed by the assessee was dismissed in its entirety. The Tribunal upheld the CIT(A)'s valuation of the Tenali house property and the decision to assess the property in the hands of the assessee. The request to set off business losses against the income was also dismissed as it was not part of the original appeal. The judgment was pronounced in the open court on 28th July 2016.