Clubbing of spouse's rental income rejected where the property stood in the spouse's name and no legal basis for assessment in husband's hands existed.

Rental income from a house property registered in the spouse's name could not be clubbed in the assessee's hands merely because the assessee had advanced funds for purchase or because the spouse later repaid the loan from her own investments. The rent was declared by the spouse under income from house property and accepted by the revenue, and no legal basis was shown to ignore the registration in her name. The observation that a husband cannot pay rent to his wife had no legal foundation. The clubbing addition was therefore deleted.

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Issues: Whether the rental income received by the assessee's spouse from the house property could be clubbed in the assessee's hands under the income-tax provisions.

Analysis: The spouse had received funds from the assessee and later repaid the loan out of mutual funds and fixed deposits. The rent was declared by the spouse under the head income from house property and accepted by the revenue. The property stood registered in the spouse's name, and the mere fact that the assessee had funded part of the purchase did not, by itself, establish that the rental income had to be assessed in the assessee's hands. The observation that a husband cannot pay rent to his wife was held to have no legal basis for disallowing the claim.

Conclusion: The clubbing addition was not sustainable and the issue was answered in favour of the assessee.

Final Conclusion: The assessment addition made by clubbing the rental income in the assessee's hands was deleted and the appeal succeeded.

Ratio Decidendi: Rental income from a property registered in the spouse's name cannot be clubbed in the assessee's hands merely because the assessee had advanced funds or because the spouse had repaid those funds from her own investments, unless a legal basis for clubbing is established.

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