2005 (8) TMI 73 - HC - Income Tax

Exclusion of income of the wife of the respondent-assessee, from the income of the respondent-assessee - The Assessing Officer found that the assessee has not shown that she has any knowledge about the source of her income and investments and decided to club the income of the wife of the assessee with his income for the assessment years 1994-95 and 1995-96. - We are of the opinion that the material provided relevant basis for deleting the clubbing of the income of wife in the income of assessee and considering the protective assessment to be a substantive assessment in her own right. - we are further informed that since the filing of this appeal, the assessee s wife had made a declaration under the Kar Vivad Samadhan Scheme, and which has been certified by the Commissioner of Income-tax. Therefore, the assessment in her favour became a substantive assessment by her submitting an application under Kar Vivad Samadhan Scheme declaring the income as her own income revenue appeal dismissed

Summary

Issues:
Appeal by Revenue against Tribunal's order regarding clubbing of income of wife with husband for assessment years 1994-95 and 1995-96.

Analysis:
The appeal was filed by the Revenue against the Tribunal's decision on the clubbing of income of the wife with the husband for the assessment years 1994-95 and 1995-96. The Tribunal had decided on the appeal and cross-objection by the assessee in a common order. The cross-objections were not pressed by the assessee before the Tribunal, and the appeals of the Revenue were dismissed. The main issue in this appeal was the exclusion of income of the wife from the husband's income. The Assessing Officer had decided to club the income of the wife with the husband's income as the wife allegedly had no knowledge about the source of her income and investments.

The Commissioner of Income-tax (Appeals) found that the wife was an assessee in her own right since 1984-85 and had her own capital. The Commissioner noted that the wife had been assessed independently since 1984-85 and there was no justification for including her income in the husband's income. The Tribunal affirmed this finding and deleted the clubbing of the wife's income with the husband's income. The substantive assessment was made in the name of the husband, while the wife was to be assessed substantively in respect of her income.

It was emphasized that the wife had been assessed independently for several years, except for the two assessment years in question. The material provided a relevant basis for deleting the clubbing of the wife's income with the husband's income. Additionally, it was mentioned that the wife had made a declaration under the Kar Vivad Samadhan Scheme, certifying her income as her own. This further supported the dismissal of the appeal by the Court.

In conclusion, the Court found no merit in the Revenue's appeal and dismissed it. The wife's assessment became substantive through her declaration under the Kar Vivad Samadhan Scheme. Therefore, the clubbing of her income with the husband's income was deemed unjustified, and the appeal was rejected with no order as to costs.