9911796707
|
Home
Issues Involved:
1. Determination of the status for tax purposes of income from house property owned by a husband and wife married under the Portuguese Civil Code. 2. Interpretation of "definite and ascertainable shares" under Section 26 of the Income-tax Act, 1961. 3. Applicability of the Portuguese Civil Code to determine ownership and management of communion property. Detailed Analysis: 1. Determination of the Status for Tax Purposes: The primary issue was whether the income from house property, owned by a husband and wife married under the Portuguese Civil Code, should be assessed as a "body of individuals" or in their individual capacities. Initially, the Income-tax Officer assessed the income as belonging to a "body of individuals," but this was reversed by the Appellate Assistant Commissioner, who held that the income should be taxed in the individual hands of the husband and wife. The Tribunal confirmed this view, stating that each consort had a vested interest in their half share. 2. Interpretation of "Definite and Ascertainable Shares": Section 26 of the Income-tax Act, 1961, was central to this case. It states that where property is owned by two or more persons with definite and ascertainable shares, they should not be assessed as an association of persons. The court had to determine if the shares of the husband and wife in the communion property were "definite and ascertainable." The court noted that the terms "definite" and "ascertainable" imply shares that are fixed and certain, not fluctuating or dependent on contingencies. The court rejected the argument that the shares must be definite and ascertainable for each individual property, holding that it is sufficient if the shares are definite and ascertainable in the collective income from all properties. 3. Applicability of the Portuguese Civil Code: The court examined various articles of the Portuguese Civil Code, which governs the property relations between spouses married under the custom of Goa. Articles 1108 to 1124 were particularly relevant, as they deal with the communion of property. Article 1117 was crucial, stating that "the dominion and possession" of the common estate vest in both consorts, though the management belongs to the husband. The court found that both husband and wife have a fixed and certain half share in the corpus and income of the communion property, ascertainable upon the termination of the communion by divorce, separation, or death. This was supported by various articles, including Articles 1121 to 1124, which deal with the termination and partition of the communion property. Conclusion: The court concluded that under the Portuguese Civil Code, the husband and wife each have a definite and ascertainable share in the corpus and income of the communion property. Therefore, Section 26 of the Income-tax Act, 1961, applies, and the income should be assessed separately in the hands of each spouse, not as a "body of individuals." Judgment: The High Court answered the reference against the Commissioner, holding that the respective half shares of the husband and wife in the income from the house property should be assessed separately in equal shares in the hands of each of them, and not in the hands of "the body of individuals" of the communion of husband and wife. The Commissioner was ordered to pay the costs of the reference to the assessee.
|
