2022 (6) TMI 182 - AT - Income Tax

Addition being the income shared with the appellant's spouse by the application of section 5A of the income tax act 1961 as the appellant is governed by the Portuguese civil code - sharing of income between the husband and the spouse in view of benefit provided under section 5A - HELD THAT - Admittedly, the appellant assessee originally belongs to the state of Kerala and migrated to Goa in 1979 for employment. It is also not under dispute that the appellant was not borne in Goa and nor his parents are borne in Goa. Thus, before coming to Goa, appellant did not have any connection of himself or his parents to the Portuguese territory. Therefore, as per the domicile certificate produced, the appellant can be said to a resident of Goa but he can't be said to be governed by Portuguese civil code. Since, the appellant's spouse was a Goan but she loses to be the member of the Portuguese territory, after marrying the appellant who is not the member of the Portuguese territory as rightly held by the Ld. CIT(A). In our view, the appellant can't avail the benefit of section 5A of the act. The Judgement of Hon'ble Bombay High Court, in the case of Goa Salaries Taxpayers Association vs Union of India 2000 (10) TMI 22 - BOMBAY HIGH COURT is distinguishable on peculiar facts of the case as in the instant case the appellant was not governed by Portuguese civil code, rather the appellant's spouse though Goan but she loses to be the member of the Portuguese territory, after marrying the appellant who is not the member of the Portuguese territory. Thus, the benefit of the application of section 5A of the income tax act 1961, is not available to the appellant. Appeal of assessee dismissed.

Summary

Issues:
1. Applicability of section 5A of the Income Tax Act 1961 to apportion income between spouses governed by the Portuguese civil code.
2. Interpretation of domicile and eligibility for benefits under section 5A.
3. Consideration of judicial precedent in determining eligibility for income sharing benefits.

Analysis:

Issue 1: Applicability of section 5A of the Income Tax Act 1961
The appeal involved a challenge against the addition of income shared with the appellant's spouse under section 5A of the Income Tax Act 1961. The appellant argued for the equal apportionment of income between spouses governed by the Portuguese civil code. The AO rejected the claim, leading to the appeal. The learned CIT(A) upheld the addition, emphasizing the appellant's lack of connection to the Portuguese territory before migrating to Goa. The Tribunal concurred, ruling that the appellant did not qualify for the benefits of section 5A due to not being governed by the Portuguese civil code.

Issue 2: Interpretation of domicile and eligibility for section 5A benefits
The counsel for the appellant highlighted the provisions of section 5A and produced a marriage certificate as proof of being governed by the Portuguese civil code. However, the Tribunal noted that the appellant's origin in Kerala and migration to Goa did not establish a connection to the Portuguese territory. The Tribunal emphasized that the appellant's spouse, though Goan, lost membership of the Portuguese territory upon marriage to the appellant, who was not a member. Consequently, the appellant was deemed ineligible for section 5A benefits.

Issue 3: Consideration of judicial precedent
The appellant relied on a judgment of the Bombay High Court regarding the application of section 5A to individuals governed by the Portuguese civil code. However, the Tribunal distinguished the case, emphasizing the specific circumstances where the appellant did not meet the criteria for benefiting from section 5A. The Tribunal concluded that the appellant's situation did not align with the conditions for income sharing under section 5A, leading to the dismissal of the appeal and the confirmation of the addition of income shared with the spouse.

In summary, the Tribunal's decision centered on the appellant's lack of eligibility for section 5A benefits due to not being governed by the Portuguese civil code, despite the spouse's Goan origin. The judgment underscored the importance of meeting specific criteria for income apportionment under the Income Tax Act 1961, ultimately upholding the addition of income shared with the spouse.