House property income and co-ownership share determination turned on actual contribution and incidental amenities from letting.

Co-ownership shares in a jointly acquired property may be determined by the actual contribution proved on record; where the evidence of separate funding requires verification, the matter is remitted for factual examination. Rent and service charges from an isolated commercial property are taxable as income from house property when the dominant letting is of the building and the amenities are only incidental, with no inseparable letting of plant, machinery or furniture established. The co-ownership issue was restored to the Assessing Officer for verification, while the income characterisation issue was decided in favour of the assessee.

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Issues: (i) Whether the husband and wife, who purchased the property in joint names and claimed contribution from separate funds, were assessable as an association of persons; and (ii) whether the rental receipts and service charges from the commercial property were assessable as income from other sources or as income from house property.

Issue (i): Whether the husband and wife, who purchased the property in joint names and claimed contribution from separate funds, were assessable as an association of persons.

Analysis: The property was acquired in joint names without any express recital of specific shares. However, the assessee produced additional evidence to show independent sources of income and contribution towards the purchase consideration through a joint account. In a case of joint transfer for consideration, the share of co-owners is to be determined according to the consideration advanced by each, and where the evidence of contribution requires examination, the matter must be verified on facts.

Conclusion: The issue was restored to the Assessing Officer for examination and verification of the additional evidence.

Issue (ii): Whether the rental receipts and service charges from the commercial property were assessable as income from other sources or as income from house property.

Analysis: The letting related to an isolated commercial property and was not part of any organised business of leasing properties. The service charges were only for common amenities such as power backup, air-conditioning, lifts and parking, and no separate plant, machinery or furniture letting of an inseparable character was established. Where the dominant letting is of the building and the amenities are merely incidental, the receipts retain the character of house property income rather than income from other sources.

Conclusion: The receipts were held to be assessable as income from house property, and the contrary view of the lower authorities was set aside.

Final Conclusion: The appeals succeeded in part, with one issue remanded for factual verification and the rental income issue decided in favour of the assessee.

Ratio Decidendi: In joint acquisition of property, co-ownership shares may follow the actual contribution proved on record, and receipts from letting of a building remain taxable as house property income where the predominant letting is of the building and any ancillary amenities do not amount to inseparable letting of plant, machinery or furniture.

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