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1. Inclusion of income from a house property purchased by the wife from funds gifted by her husband in the husband's income under section 64(1)(iv) of the Income-tax Act, 1961. Analysis: The judgment involves appeals by the revenue regarding the inclusion of income from a house property purchased by the wife from funds gifted by her husband in the husband's income under section 64(1)(iv) of the Income-tax Act, 1961. The wife acquired the property exclusively from funds provided by her husband through a cash gift. The issue revolves around the interpretation of section 64(1)(iv) which includes income arising directly or indirectly to the spouse from assets transferred by the individual. The departmental representative cited various judicial precedents to support the inclusion of such income in the husband's total income. The counsel for the assessee argued that the addition of Explanation 3 to section 64 in 1975, specifically addressing investments in business by a spouse or minor child, indicates that income from converted assets may not fall under section 64(1)(iv). However, the tribunal noted that the purpose of adding Explanation 3 was to prevent tax avoidance through investments and not to create an exemption for income from converted assets. The tribunal emphasized that the law was clear regarding income from property acquired by a spouse through funds provided by the other spouse, as established by the Supreme Court in a previous case. Therefore, the tribunal held that the income from the property in question, acquired by the wife from funds gifted by the husband, was taxable in the hands of the husband under section 64(1)(iv). The tribunal's decision was based on the interpretation of section 64(1)(iv) in light of the legislative intent behind adding Explanation 3 and established legal principles from previous judicial decisions. The tribunal clarified that the purpose of the amendment in 1975 was to address specific loopholes and not to create new exemptions for certain types of income. By relying on the Supreme Court's precedent in a similar case, the tribunal concluded that the income from the property acquired by the wife using funds gifted by the husband should be included in the husband's income under section 64(1)(iv). As a result, the tribunal allowed the revenue's appeals, revoking the directions given by the lower authority and restoring the assessment orders passed by the Income Tax Officer. In summary, the judgment addressed the issue of including income from a property purchased by the wife using funds gifted by her husband in the husband's income under section 64(1)(iv) of the Income-tax Act, 1961. The tribunal analyzed the legislative intent behind the relevant provisions, considered previous judicial decisions, and concluded that the income in question should be taxable in the husband's hands.
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