2006 (3) TMI 66 - HC - Income Tax

Court rules income from disputed property not taxable, upholds wife's ownership. Revenue's appeals dismissed.

The court affirmed that the income from the property at 100 AE Anna Nagar, Chennai should not be taxed in the assessee's hands as the Revenue failed to ... Assessee’s wife alone is the real owner as revenue is unable to prove that said property was purchased by assessee in the name of his wife – income from said house property will not be taxable in the hands of assessee. Issues:1. Whether the Tribunal was right in not considering the ground raised by the revenue regarding the addition of income from the house property at 100 AE Anna Nagar, ChennaiRs.2. Whether the assessee's contention that the property at 100AE Anna Nagar, Chennai belongs to his wife and not to him is acceptableRs.Analysis:1. The case involves an appeal by the Revenue against the order of the Income-tax Appellate Tribunal related to the assessment years 1985-86 and 1986-87. The dispute revolves around the ownership of a property at 100 AE Anna Nagar, Chennai. The Revenue contended that the property, registered in the name of the assessee's wife, should be considered as belonging to the assessee for tax purposes under section 22 of the Income-tax Act. The Revenue argued that the income from the property should be taxed in the hands of the assessee. However, both the Commissioner of Income-tax (Appeals) and the Tribunal held that the property indeed belonged to the wife, based on the lack of evidence provided by the Revenue to prove otherwise.2. The Tribunal's order highlighted that the property in question was owned by the assessee's wife, and the payment of rent was not disputed. The Revenue's objection, based on the wife's lack of a regular income, was deemed insufficient to establish ownership by the assessee. The Tribunal emphasized that the burden of proof was on the Revenue to demonstrate that the property was purchased by the assessee in his wife's name. Since the genuineness of the payment was not in question, the Tribunal upheld the lower authorities' decision. The Tribunal concluded that without evidence showing the property belonging to the assessee, the income from the house property at 100 AE Anna Nagar, Chennai could not be taxed in the hands of the assessee.3. The judgment clarified the legal concept of ownership under section 22 of the Income-tax Act, emphasizing that the owner, for tax purposes, is the person entitled to receive income from the property. The court affirmed that the income from the property in question should not be taxable in the hands of the assessee as the Revenue failed to establish ownership by the assessee. The court dismissed the appeals by the Revenue, upholding the decisions of the lower authorities and the Tribunal. Consequently, the court rejected the substantial questions of law raised by the Revenue, leading to the dismissal of the appeals and related applications.