Income attribution to spouse: rent from gifted property is includible in the husband's income; benami finding requires positive proof.

Income arising to a wife from property gifted by the husband falls within subsection (3) of Section 16 and is includible in the husband's taxable income; accordingly the inclusion of the rent received by the wife was upheld. Separately, the revenue failed to adduce positive material to displace ostensible ownership of properties held in the names of the assessee's sons; mere evidence of sons' limited independent income and maintenance by the assessee is insufficient to establish benami title, so the benami finding was set aside in favour of the assessee.

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Issues: (i) Whether inclusion in the assessee's income of Rs. 3,041 received by his wife as rent of property gifted to her is legally justified; (ii) Whether the finding that properties acquired in the names of the assessee's three sons were benami and that the assessee was the real beneficiary is supported by evidence.

Issue (i): Whether rent received by the assessee's wife from property gifted to her falls within the income includible under the relevant statutory provision.

Analysis: The issue is governed by sub-section (3) of Section 16 of the Income-tax Act as interpreted by prior precedent applicable to the facts. That precedent establishes that income arising to a wife from property gifted by the husband is caught by the statutory provision and is includible accordingly. The present facts fall within the scope of that ruling.

Conclusion: The inclusion of Rs. 3,041 received by the wife as rent is legally justified. This conclusion is against the assessee.

Issue (ii): Whether the Department discharged the burden of proving that properties standing in the names of the assessee's three sons were benami and that the assessee was the real beneficiary.

Analysis: The question turns on whether there was material justifying disregarding the ostensible ownership and treating the sons as not the real owners. The Department bears the onus of proving that the apparent owners were not the real owners. Absent evidence of transfer by the assessee, and where the only indicia are that the sons had little independent income and received maintenance from the assessee, such facts alone do not suffice to displace ostensible ownership, especially in the family context considered.

Conclusion: The finding that the properties were benami and that the assessee was the real beneficiary is not supported by evidence. This conclusion is in favour of the assessee.

Final Conclusion: The reference is answered with one issue decided against the assessee (inclusion of the wife's rent) and one issue decided in favour of the assessee (no proof of benami ownership of properties in sons' names), resulting in a partly favourable outcome for the assessee; costs are adjusted in part.

Ratio Decidendi: Income arising to a wife from property gifted by the husband falls within sub-section (3) of Section 16 and is includible in the husband's income, while the revenue bears the onus of adducing positive material to displace ostensible ownership and prove benami title.

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