1993 (7) TMI 160 - AT - Income Tax

Summary

Issues:
Assessment of salary income under Portuguese Civil Code in equal parts between husband and wife.

Detailed Analysis:

Issue 1: Assessment of Salary Income
The appellant appealed against the order of the Dy. CIT (Appeals) challenging the assessment of salary income. The appellant claimed that the salary income should be divided equally between the husband and wife as per the Portuguese Civil Code. However, the Assessing Officer assessed the entire salary income in the hands of the husband. The Dy. CIT (Appeals) upheld this decision, citing a previous Bombay Tribunal ruling that salary income should be taxed in the individual's hands only.

Issue 2: Interpretation of Portuguese Civil Code
The Tribunal discussed the interpretation of the Portuguese Civil Code in relation to income assessment. Previous cases had established that property, business, and professional income should be divided equally between spouses under the Code. However, the treatment of salary income remained unresolved. The Tribunal noted that the Bombay High Court recently ruled that salary earned by an individual should be considered individual income, not communal property under the Code. This decision clarified that salary income should not be divided between spouses for tax assessment purposes.

Issue 3: Community Property Concept
The Tribunal examined the concept of community property and its application to salary income. The definition of community property as per Black Law Dictionary refers to property owned jointly by spouses. However, the Tribunal emphasized that this definition does not apply to salary income, especially in light of the Bombay High Court's decision regarding the individual nature of salary income.

Issue 4: Precedents and High Court Decisions
The Tribunal referenced previous Bombay High Court decisions related to property income, business income, and professional income under the Portuguese Civil Code. These decisions established that such income should be assessed separately for each spouse. The recent High Court ruling specifically addressed the assessment of salary income, confirming that it should be taxed in the individual's hands only. The Tribunal upheld the Dy. CIT (Appeals) decision based on this legal precedent.

Conclusion:
The Tribunal dismissed the appeal, affirming the assessment of the entire salary income in the hands of the husband. The decision was based on the clarification provided by the Bombay High Court regarding the individual nature of salary income under the Portuguese Civil Code. The ruling emphasized that salary income should not be divided equally between spouses for tax assessment purposes, aligning with the legal principles established in previous High Court decisions.