1985 (5) TMI 123 - AT - Income Tax

Summary

Issues Involved:
1. Ownership of the house property.
2. Nature of the transaction as benami.
3. Investment and contribution towards the property.
4. Applicability of Section 64 of the Income Tax Act, 1961.

Detailed Analysis:

1. Ownership of the House Property:
The primary issue was whether Smt. Alka Chaudhary was the owner of the ground and first floors of the house property on plot No. 93-94, Central Avenue Road, Nagpur, or merely a benamidar for her husband, Dr. Vinayak Chaudhary. The assessee claimed co-ownership, while the Department asserted exclusive ownership by Dr. Chaudhary, with Smt. Alka Chaudhary as a benamidar.

2. Nature of the Transaction as Benami:
The Tribunal emphasized that the burden of proving benami rests on the Department, requiring strict evidence of a definite character. The essence of benami lies in the intention at the time of the transaction, which must be established through legal evidence or unerring circumstances.

3. Investment and Contribution Towards the Property:
The Tribunal examined the financial contributions of both parties towards the property. Initially, Dr. Chaudhary made payments, but 50% was later debited to Smt. Alka Chaudhary's account. Both parties made subsequent payments, and the Tribunal found that Dr. Chaudhary was reimbursed for his contributions, establishing equal financial involvement from both parties.

- Construction Contributions:
- Smt. Alka Chaudhary: Initial investment of Rs. 14,000, loans from Vijaya Bank (Rs. 2,10,000), Professor Mahure (Rs. 12,000), and Mr. A. R. Phalak (Rs. 15,000).
- Dr. Vinayak Chaudhary: Cash deposits and loans from United Bank of India (Rs. 1,00,000).

The Tribunal accepted the evidence of Smt. Alka Chaudhary's contributions, including cash flow statements and bank records, despite Departmental challenges.

4. Applicability of Section 64 of the Income Tax Act, 1961:
The AAC's alternative finding that income from the property should be included in Dr. Chaudhary's assessment under Section 64 was rejected. The Tribunal held that Section 64 presupposes real ownership by the spouse but with assets acquired through transfer without consideration from the husband. Since Smt. Alka Chaudhary was found to be a co-owner in her own right, Section 64 was deemed inapplicable.

Conclusion:
The Tribunal concluded that Smt. Alka Chaudhary was not a benamidar but a genuine co-owner of the property. The evidence demonstrated equal contributions and active involvement in the property's acquisition and construction. Consequently, the income from her portion of the property could not be included in Dr. Chaudhary's total income, and Section 64 did not apply. The appeal filed by the assessee was allowed.