2023 (1) TMI 660 - AT - Income Tax

Appeal dismissed, Rs. 9,80,000 added to assessee's income based on joint ownership in sale deed.

Smt. Shivani Madan Versus ACIT, Central Circle-05, New Delhi

The Tribunal dismissed the appeal, confirming the addition of Rs. 9,80,000/- in the assessee's hands. The decision was based on the joint ownership ... Assessment of income from house property - Co-ownership of property - Addition on account of Notional Rent of self-occupied house property fully assessed in the hands of her husband, in which the contribution of the appellant was only 5.4% of the total purchase consideration - ownership of the property would be considered 50-50 and taxed as per section 23(1)(a) - As assessee did not provide any expected reasonable rent of the property, he assessed the annual letting value at 8% of the cost of property as shown in the sale deed and computed income from house property - HELD THAT:- There is sale deed and the co-ownership is evidenced therein but there is no specification of shares of the husband and wife in the sale deed. Therefore, following the decision of Saiyad Abdulla’s case [1922 (6) TMI 3 - ALLAHABAD HIGH COURT] it must be held that husband and wife purchased equal shares and therefore, the Revenue is justified in bringing to tax 50% of the income from house property in the hands of the assessee. The decision of Ajit Kumar Rao’s case [2001 (6) TMI 41 - CALCUTTA HIGH COURT] relied upon by the Ld. AR also does not help the assessee. In that case, the assessee’s wife had purchased a flat in her name but she being the housewife did not have independent source of income and the entire investment was made by the assessee (husband). It was in such a scenario that the Hon’ble Calcutta High Court held that the income from property should be taxed in the hands of the assessee (husband) and not in the hands of his wife. In the case before us, the property has been purchased by husband and wife in co-ownership jointly. The assessee is not a housewife. Computation of income for AY 2015-16 appearing at page 2 of Paper Book shows that she is salary earner and earned salary of Rs. 24 lacs from Adam Smith Associates Pvt. Ltd. in AY 2015-16. Therefore, on facts the case of the assessee before us differs from the Ajit Kumar Rao’s case (supra). - Decided against assessee. Issues Involved:1. Validity of the CIT(A)'s order confirming the AO's decision.2. Addition of Rs. 9,80,000/- on account of notional rent of self-occupied house property.Issue-wise Detailed Analysis:1. Validity of the CIT(A)'s Order:The appeal by the assessee challenges the CIT(A)'s order dated 11.09.2020, which upheld the AO's order dated 30.12.2019. The assessee contends that the CIT(A)'s order is 'bad in law.' The CIT(A) confirmed the AO's addition of Rs. 9,80,000/- on account of notional rent from a property jointly owned by the assessee and her husband.2. Addition of Rs. 9,80,000/- on Account of Notional Rent:The case involves a search conducted on 28.11.2017, revealing the purchase of property J-278, Saket, Delhi, jointly owned by the assessee and her husband. The AO, during the assessment, noted that the sale deed did not specify the ownership shares, leading to the assumption of a 50-50 ownership split. The AO computed the annual letting value (ALV) at 8% of the property's cost, resulting in an income from house property of Rs. 19,60,000/-, of which Rs. 9,80,000/- was assessed in the assessee's hands.The CIT(A) upheld the AO's decision, stating that 'ownership of a property is a condition precedent for levy of tax' and that the appellant was 'joint owner of the property along with her husband.' The CIT(A) relied on several case laws, including R.B. Jodha Mai Kuthiala v. CIT and Kaur Singh v. CIT, to support the decision.The assessee argued that her contribution was only 5.4% of the total purchase consideration and that taxing 50% of the house property income in her hands was unjustified. She cited section 26 of the Act, which allows for the assessment of income based on definite and ascertainable shares of co-owners. The assessee relied on the Allahabad Bench's decision in ACIT vs. C.K. Malik and the Calcutta High Court's decision in CIT vs. Ajit Kumar Roy.The Revenue argued that the sale deed did not specify the co-owners' shares, and the entire consideration was paid jointly by the husband and wife. The AO and CIT(A) held that in the absence of specific shares in the sale deed, ownership is assumed to be equal.The Tribunal agreed with the Revenue's stance, citing the sale deed's lack of specific shares and the precedent set by the Allahabad High Court in Saiyad Abdulla vs. Ahmad, which held that in the absence of specified shares, ownership is assumed to be equal. The Tribunal also noted that the assessee was not a housewife and had a substantial income, differentiating her case from Ajit Kumar Roy's case.Conclusion:The Tribunal dismissed the appeal, confirming the addition of Rs. 9,80,000/- in the assessee's hands. The decision was based on the joint ownership evidenced in the sale deed without specified shares, leading to an equal ownership assumption. The Tribunal found no merit in the assessee's arguments and upheld the CIT(A)'s and AO's decisions. The order was pronounced on 5th January 2023.