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TMI Blog1979 (1) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the value of the said property should be taken as nil. This contention of the assessee did not find favour with the ITO, who was of the opinion that in the past, that is, in assessment year 1965-66, the income from the property was included which was not objected to by the assessee. He, therefore, included a sum of Rs. 1,500 on that account for the assessment years under reference in the income of the assessee under s. 64(1)(iv) of the I.T.Act, 1961. The assessee being aggrieved by the said order, went in appeal before the AAC. Same contention was reiterated before the appellate authority that having regard to the proviso to s. 23(2), income from self-occupied property is to be computed in the hands of the wife subject to a maximum value of 10% of the other income of the owner of the property, and that the income from house property could be included in the hands of the assessee under s. 64(1)(iv) of the I.T. Act, 1961. The AAC of Income-tax accepted this contention and granted reduction of Rs. 1,500 for each of the assessment years 1967-68 and 1968-69 and Rs. 1,803 for assessment year 1969-70. The revenue, therefore, carried the matter in further appeal before the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e latter case, the annual value of such property would be determined in the same manner as if the property had been let and further be reduced by one-half of the amount so determined or one thousand and eight hundred rupees, whichever is less. In a case where more than one house is in the occupation of the owner for purposes of his residence, the provisions of cls. (i) and (ii) of sub-s. (2), set out above, are to be applied in respect of one of such houses specified by the assessee in that behalf. Proviso to sub-s. (2), however, restricts the maximum value of the income to 10% of the total income of the owner and the total income for this purpose is to be computed without including therein any income from such property and before making any deduction under Chap. VIA. In other words, the maximum value of income from house property which is occupied by the owner himself is 10% of his other income. Section 64 is a part of Chap. V, which provides for inclusion of income of other persons in assessee's total income. Section 64 provides for inclusion of income of spouse, minor child, etc., in the income of an individual. Section 64(1)(iv), which is relevant for the purpose of this refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer is in connection with an agreement to live apart. Unless, therefore, a case comes within the terms of s. 27(i), the other income of a transferor of any house property cannot be considered for purposes of computing income from the house property occupied by the transferee. It may be that income from such house property may be liable to be included in the income of an individual under s. 64(1)(iv). That situation would not necessarily result, as held by the Tribunal, in the other income of the assessee being considered for the basis of application of the proviso to s. 23(2), because the said proviso enjoins that income from house property should not exceed 10% of the other income of the owner. On a plain reading of these three provisions, it is clear to us that it is the other income of an owner-whether actual or fictional-which is to be considered, for finding out the maximum value of the income from house property under the proviso to s. 23(2). It cannot be gainsaid that the fictional owner would be one under s. 27(i) of the Act, who transfers otherwise than for adequate consideration any house property to his spouse or minor child not being a married daughter. If the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3)(a)(iii) of the 1922 Act was in pari materia to the one contained in s. 64(1)(iv) of the 1961 Act. It was in that context of the provisions of the 1922 Act, as were in force, that the Supreme Court was called upon to answer the question set out above. The High Court had not gone into the above question as it did not think it necessary to go into that question. Hegde J., as he then was, speaking for the Supreme Court, observed as under : " Section 9 deals with only one head of income. Prior to the transfer by the assessee, he, in law, would have been considered as the owner of those premises for purposes of ascertaining his income from house property and that income would have been taken into account in computing his total income. In other words, in ascertaining the total income of the assessee for the purpose of assessment that income also would have entered into the calculation. Hence when section 9(4)(a) speaks ' for the purpose of this section ' it really means for the purpose of determining the taxable income of the assessee. It must be remembered that an assessee is not separately taxed under each head of income. Hence, when a source of income is transferred by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh amount from which the transferee purchases a house property, it cannot be said that the transferor would be a fictional owner under s. 27(i). The view of the Tribunal, following the decision in Maharaj Kumar's case [1973] 89 ITR 1 (SC), would have been correct if the assessee here could be held to be a fictional owner of the house property in question, which we cannot do in view of the definition of " owner of house property " given in s. 27(i). It should be recalled that the assessee made a gift of cash amount to his wife out of which the house property in question was purchased. Unless, therefore, the house property in specie is transferred otherwise than for adequate consideration to the spouse or minor child, not being a married daughter, it cannot be concluded that the transferor would be a fictional owner. In our opinion, therefore, the Tribunal was clearly in error in applying the ratio of the decision in Maharaj Kumar Kamal Singh's case [1973] 89 ITR 1 (SC) to the facts of the present case. Our attention has been invited to the decision of the Madras High Court in R. Ganesan's case [1965] 58 ITR 411 (Mad), where the assessee before the Madras High Court transferred an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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