COMMISSIONER OF INCOME TAX, CALCUTIA vs. BIJOY KUMAR ALMAL

CIVIL APPEAL No. 2298/1977Supreme Court[1995] 3 S.C.R. 17004 April 1995Bench: 2 JudgesAuthor: B.P. JEEVAN REDDY, G.T. NANAVATI B COMMISSIONER OF4 pages
AI SummaryDismissed

What were the facts?

The assessee, Bijoy Kumar Almal, owned an undivided one-third share in a house property occupied for his own residence along with his brother and other co-sharers. For the assessment year 1962-63, the Income Tax Officer (ITO) deducted the amount specified in Section 23(2) of the Income-Tax Act, 1961, from the annual letting value of the entire house and then apportioned the balance among the co-owners. The assessee contended that the deduction under Section 23(2) should be allowed separately to each co-owner from their respective shares. The Tribunal and the High Court ruled in favour of the assessee. The Revenue preferred an appeal to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that the language of Section 26 of the Income-Tax Act, 1961, even without its Explanation, is clear. It stipulates that where property is owned by two or more persons with definite and ascertainable shares, they shall not be assessed as an association of persons, and the share of each person in the income from the property, as computed under Sections 22 to 25, shall be included in their total income. Sections 22 to 25 prescribe the method for determining income from house property. Therefore, the assessee was justified in claiming the deduction under Section 23(2) separately from his share in the annual value, as he had a definite and ascertainable share. The Court noted that the Explanation to Section 26, inserted by the Taxation Laws (Amendment) Act, 1975, further clarifies this position. The Court approved the views of the Delhi and Bombay High Courts in CIT v. Shyam Sunder and Tulsi Das v. CIT, and the Calcutta High Court's decision in CIT v. Shanti Devi Jalan. The appeal was dismissed.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the statutory allowance mentioned in Section 23(2) of the Income-tax Act, 1961, should be allowed separately in computing the income from house property falling to the share of each co-owner, including the assessee? (Question of law) Assessee's contention: The deduction provided for by Section 23(2) should be granted separately to each co-owner from their respective shares in the annual value of the property. The assessee relied on the principle that where property is owned by multiple individuals with definite and ascertainable shares, their income should be computed individually. Revenue's contention: The Revenue's appeal implies disagreement with the assessee's contention, arguing that the deduction should be applied to the total annual value before apportionment. The judgment does not explicitly record the Revenue's specific arguments or precedents cited.

Which sections of the Income-tax Act were involved?

Section 23,Section 26,Section 22,Section 25

AI-generated summary — verify with the full judgment below

A B COMMISSIONER OF INCOME TAX, CALCUTIA v. BIJOY KUMAR ALMAL APRIL 4, 1995 [B.P. JEEVAN REDDY AND G.T. NANA VAT!, JJ.)

Income-Tax Act, 1961: Sections 23 and 26 Explanation (As inserted by Taxation Laws (Amendment) Act, 1975) Income from House Proper- ty-Computation of-Property owned by two or more ownerr-Deduction C provided under Section 23(2)---Hold should be given separately to each co- owners from out of his shares in annual value of the property of house. '• The respondent wa_s the owner or an undivided one-third share in a house which he was occupying for his own residence alongwith his brother and other co-shares. In the respondent's assessment, for the assessment D Year 1962-<i3, the I.T.O. deducted the amount specified in Section 23(2) from out of the annual letting value of the house and then apportioned the balance annual letting value among the co-owners. The respondent claimed that the deduction provided for by Section 23(2) should be given separately to each co-owner. The Tribunal and the High Court decided in his favour. E Revenue preferred appeal to this Court.

Dismissing the appeal, this Court HELD : The language of Section 26, even without ta

The order continues below.

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