High Court Of Allahabad
CIT vs. Smt. Sunita Rani Aggarwal
Assessment Year 1990-91
Section : 26
R.K. Agrawal And S.K. Gupta, JJ.
IT Reference No. 1 Of 2000
July 13, 2009
JUDGMENT
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1. The Income-tax Appellate Tribunal, Delhi has referred the following two questions of law under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) :
“1.Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally justified in holding that income from the property ‘Aggarwal Market’ is to be assessed in the hands of each of the co-owners separately and not in the hands of AOP ?
2. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally justified in holding that the provisions of section 26 of the Income-tax Act are applicable in this case ?”
2. Briefly stated the facts giving rise to the present reference are as follows :
3. The reference relates to the assessment year 1990-91.
4. The respondent-assessee filed her return of income declaring income, including rental income from property known as Aggarwal Market. Eight persons, including the respondent-assessee, had purchased 27805 sq. ft. of land near Mahavir Chowk, Muzaffarnagar from M/s. Anand Swaroop and Sons during the financial year relevant to the assessment year 1993-94 (sic). The purchase by each of the 8 persons was effected by separate registered deeds. The area of land purchased and investment made therein was also different in respect of 8 persons. All the 8 persons applied separately to the prescribed authority for approval of construction of shops and separate maps were submitted. However, all the 8 persons started construction jointly and a consolidated map was prepared for the whole area. They decided to share 1/8th of the rental income derived from the income of Aggarwal Market. The assessing authority held that the income from property known as Aggarwal Market is assessable as income of the association of persons, i.e., M/s. Aggarwal Market. The Tribunal had held that the value of the commercial property was not to be assessed in the hands of the assessee as an AOP but in the hands of the co-owners. In view of the order of the Tribunal, the Assessing Officer made an assessment in the cases of the present respondents on protective basis instead of substantive basis.
5. The appeal preferred by the respondent-assessee was dismissed by the Deputy Commissioner of Income-tax (Appeals) on the ground that the assessee had no grievance as the income declared had been accepted. However, on further appeal the Tribunal had directed that income from the property should be assessed in the hands of the respondent-assessee on substantive basis as the shares of each assessee are ascertainable and in view of the provision of section 26 of the Act, the same cannot be assessed in the hands of the AOP.
6. We find that under section 26 of the Act where property consisting of buildings or buildings and lands appurtenant thereto is owned by two or more persons and their respective shares are definite and ascertainable then such persons cannot be assessed in respect of such property as an association of persons but the share of each such person in the income from the property has to be computed in accordance with sections 22 to 25 and is to be included in the total income of such person. Applying the provisions of section 26 of the Act, to the facts of the present case we find that in the present case the respective shares of income are ascertainable and therefore are to be assessed individually. The Tribunal has not committed any illegality in doing so. We may mention here that the Division Bench of this court in the case relating to Aggarwal Market being Income-tax Appeal No. 53 of 2003, CIT v. Aggarwal Market [decided on July 26, 2007 and W.T.R. No. 134 of 1999], CWT v. Anil Aggarwal [decided on July 12, 2007] has taken a similar view.
7. In view of the foregoing discussion, the questions referred to us are answered in favour of the assessee and against the Revenue. However, there shall be no order as to costs.
[Citation : 334 ITR 252]
