1981 (5) TMI 61 - AT - Income Tax

Summary

Issues:
1. Taxability of income from property in the hands of the lady assessee.
2. Ownership of a property purchased in the name of a minor son.
3. Clubbing of income from the property with the lady appellant's income.
4. Benami nature of the property and burden of proof on the Revenue.

Analysis:
1. The appeals were filed by the lady assessee against the order confirming that the income from a property purchased in the name of her minor son was taxable in her hands. The Income Tax Officer (ITO) added back the income from the property for all the years under consideration. The lady contended that the investment in the property partly came from rent received by her from another property in her son's name and partly as a loan from the parent's side. However, the tribunal found that most investments in the property were made through the lady appellant, and no adequate consideration was provided by the son. As per Section 64, income arising indirectly to an individual through a minor child from assets transferred must be clubbed in the individual's income. The tribunal upheld the ITO's decision to include the property income in the lady appellant's assessment, dismissing the appeals.

2. The dispute revolved around a property purchased by the lady in her minor son's name, with a question of whether the son was the real owner or just a name lender. The lady initially showed income from the property in her returns but later claimed it as the son's income. The tribunal noted the absence of a finding on the real ownership by the authorities below. The lady's counsel argued that the property was bought to help her son, with no element of transfer or gift. It was decided that until the loan was repaid, the property income would go towards the loan. Due to the burden on the Revenue to prove the benami nature of the property, the tribunal set aside the order and directed further examination by the Appellate Authority.

3. The tribunal considered the pleas presented by both sides and found substance in the lady's counsel's arguments. It was observed that no clear determination of the property's real ownership had been made by the lower authorities. The tribunal acknowledged the intention behind the property purchase and the arrangement regarding the property income adjustment towards the loan repayment. Consequently, the tribunal allowed all four appeals filed by the assessee for statistical purposes.

This judgment highlights the complexities surrounding the taxability and ownership of properties held in the name of minors, emphasizing the need for thorough examination and substantiation of claims in such cases.