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TMI Blog1981 (7) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... ment with tenants and this should be deducted from the property income before application of provisions of section 64(2). The ITO had made protective assessment in the hands of the HUF where such deduction had been allowed. However, while computing the income of the assessee, he determined the property income strictly in accordance with sections 22 to 27 of the Act and did not allow the expenditure claimed by the assessee as a deduction. The assessee being aggrieved by this order, went in appeal before the AAC, who confirmed the ITO's order. 2. Before us, the learned counsel for the assessee urged that the provision of section 64(2) are being applied in this case. This section envisages that only the real income accruing to the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious heads and after computation, provisions of section 64(2) are not intended to change the manner of computation of the income and authorize deduction which are not otherwise allowable under the Act. 4. We have given careful consideration to the submissions made by both the sides. In our opinion, the assessee is not entitled to succeed. In Bombay case the assessee was assessed on dividends on shares transferred to wife. Section 23A of the 1922 Act was applied and the company was deemed to have declared additional dividends. These additional dividends were sought to be taxed in the hands of the transferor. The Court held that the fiction under section 16(1) of the 1922 Act did not cover such deemed income and the transferor was not liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out under section 56. If it is property income, then its income is worked out in accordance with sections 22 to 27. If it is business income, then it has to be worked out under the corresponding sections. It does not mean that if some capital expenditure has been incurred in the business that has also to be deducted and the net result alone has to be considered for the purposes of section 64(2). Such an interpretation will do violence to the language of the section. 5. In this connection, we refer to the decision of the Madras High Court in the case of S. Nagnathan v. CWT [1975] 101 ITR 227 where the assessee had transferred the property to his wife. The property was included in the net wealth of the assessee under section 4 of the Weal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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