1986 (6) TMI 60 - AT - Income Tax

Income from partially constructed house considered self-occupied property despite trust deed, emphasizing practical ownership.

Kishore Kumar Ganguly. Versus Inspecting Assistant Commissioner.

The Tribunal upheld the assessment of income from the partially constructed house as income from self-occupied property in the hands of the assessee. It ... Representative Assessee, Direct Assessment Issues:1. Whether the income from the partially constructed house should be assessed as income from self-occupied property in the hands of the assessee.2. Whether the terms of the trust deed indicate ownership of the property vested in the assessee.3. Whether the previous Tribunal decision regarding the includibility of income under sections 64 and 62 is applicable to the current assessment year.4. Whether the trust deed was a mere veil and ownership continued to vest in the assessee despite its execution.Detailed Analysis:1. The primary issue in this case is whether the income from the partially constructed house should be assessed as income from self-occupied property in the hands of the assessee. The IAC (Assessment) held that the assessee was the owner of the house despite the trust deed, and assessed the income as income from self-occupied property, adding it to the total income of the assessee. The Commissioner (Appeals) confirmed this assessment, stating that during his lifetime, the assessee was virtually the owner of the property, and income from the house property was assessable in his hands. The Tribunal was tasked with determining whether the income should indeed be assessed in the hands of the assessee.2. The second issue revolves around the interpretation of the terms of the trust deed and whether they indicate ownership of the property vested in the assessee. The trust deed executed by the assessee and his wife specified that the assessee was the owner of the property, and various clauses outlined the rights and powers of the assessee in relation to the property. The Tribunal analyzed these terms to ascertain the true ownership of the property and whether the trust deed was a genuine transfer of ownership.3. Another issue raised was the applicability of a previous Tribunal decision regarding the includibility of income under sections 64 and 62 to the current assessment year. The assessee's representative relied on a previous Tribunal decision that held notional income from self-occupied property was not includible in the total income of the assessee under those sections. The departmental representative argued that the previous decision did not cover the controversy raised in the current assessment year, leading to a discussion on the relevance and applicability of the previous decision.4. The final issue addressed was whether the trust deed was merely a veil and ownership continued to vest in the assessee despite its execution. The Tribunal considered the terms of the trust deed, the actions of the parties involved, and the practical implications of the trust arrangement to determine whether the trust deed effectively transferred ownership or if it was a facade to retain ownership with the assessee. The Tribunal ultimately confirmed the inclusion of the income in the total income of the assessee, without delving into a detailed decision on the nature of the trust deed as a veil for ownership.In conclusion, the Tribunal upheld the assessment of the income from the partially constructed house as income from self-occupied property in the hands of the assessee, emphasizing the practical ownership rights and powers exercised by the assessee despite the trust deed. The decision highlighted the importance of analyzing the specific terms of the trust deed and assessing the true nature of ownership in such arrangements.