1988 (4) TMI 115 - AT - Income Tax

Summary

Issues:
1. Interpretation of section 23(2) of the Income-tax Act regarding the availability of relief of self-occupation to Hindu undivided families (HUFs).
2. Assessment of income from a commercial flat under the head 'Income from house property' when the flat is not registered in the name of the assessee as per section 17 of the Registration Act.

Analysis:

Issue 1: Interpretation of section 23(2) regarding relief of self-occupation for HUFs
The appeal dealt with the question of whether the benefit of section 23(2) of the Income-tax Act, which restricts deemed income from self-occupied property to 10% of the total income, is available to Hindu undivided families (HUFs). The Income Tax Officer (ITO) contended that this benefit was only for individuals, not for other assessable entities, citing a judgment. However, the Appellate Tribunal found that the benefit was available to HUFs as well, as the karta of the HUF is a natural person. The Tribunal reasoned that a family consists of natural persons related to each other, and the word 'owner' in the section includes plural owners, thus encompassing HUFs. The Tribunal also highlighted that words in masculine gender include females and singular words include plural, supporting the applicability of the provision to HUFs. Therefore, the Tribunal upheld the view that the benefit under section 23(2) can be claimed by HUFs.

Issue 2: Assessment of income from a commercial flat not registered in the name of the assessee
The second ground of appeal concerned the assessment of income from a commercial flat under the head 'Income from house property' when the flat was not registered in the name of the assessee as required by section 17 of the Registration Act. The Tribunal referred to a judgment of the Delhi High Court, which held that in such cases where the property is not legally conveyed to the assessee, the rental income should be assessed as income from other sources, not as income from house property. Therefore, the Tribunal set aside the order of the Appellate Authority and restored the ITO's assessment of the rental income from the unregistered flat as income from other sources. Consequently, the appeal was partly allowed on this ground.

In conclusion, the Appellate Tribunal clarified the interpretation of section 23(2) regarding the relief of self-occupation for HUFs and addressed the assessment of income from an unregistered commercial flat, ensuring compliance with relevant legal provisions and precedents.