COMMISSIONER OF INCOME TAX, CALCUTIA

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 Property-Computation of-Property owned by two or more ownerr-Deduction C provided under Section 23(2)---Hold should be given separately to each coowners 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 taking into account the explanation, is clear enough. It provides that where property consisting F of buildings or buildings and lands appurtenant thereto is owned by two or more persons and their respective shares are definite and ascertainable, they shall not, in respect of such property, be assessed as Association of persons, and that the share of each such person in the Income from the property as computed in accordance with Sections 22 to 25 shall be included in his total income. Sections 22 to 25 prescribe the manner in G which the income from house property has to be determined. Therefore, the respondent was jnstified in claiming that the deduction provided for by Section 23(2) be allowed to him separately from out of his share in the annual value of the said house property, inasmuch as he had a definite and ascertainable share therein. Indeed, this very idea is made clear H beyond any doubt by the Explanation appended to Section 26 by the

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C.I.T.v. B.K.ALMAL(JEEVANREDDY, J.) .

I . . , Taxation Laws Amendment Act, 1975. [172-G, H, 173-A)

C/T~.Shyam Sunder, 122 I.T.R.541; Tulsi Das v. CIT, (1983) 63 CTR

'."'. 324 and ClTv.-shanti Devi Iatan, 139 ITR 152 & 106 ITR 743, approved. ; '.~ ;•·· ·~·

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 ' CIVIL 'APPELLATE JURISDICTION (NT) of 1977 . : Ci'11 Appeal No. 2298

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. :; :: •·.:From the Judgment and Order dated 24.11.75 of the Calcutta High Court in I.T.R. No. 274 of 1968.

K.N. Shukla, B.S. Ahuja and Ms. A. Subhashini for the Appellant.

The Judgment of the Court was delivered by

B.P. JEEY AN REDDY, J. This appeal is preferred by the Revenue against the judgment of the Calcutta High Court answering the question referred to ii in favour of the assessee and agaiiist the revenue. The D question 1referred under Section 256(1) of the Income-Tax Act was "(W)hether, 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 Incometax Act; 1961 should be allowed every time separately in .. computing the income from house property falling to the share of each of E the co-owners. including the assessee?"

- \ The assessment year relevant herein is 1962-63 .. The respondent was the Owiier of an undi'1ded one-third share in a house property during the relevant period. He alongwith his brother and other co-sharers was occupy '-.... mg the house for his own residence. In the respondent's assessment, the F

. •. J.T.O. deducted the amount specified in sob-section (2) of Section 23 from ' o; tt'of. the annual letting value of the house and then apportioned the balance.AL.V, among the co-owners. The respondent's case as that the dednction pr~Vided for by Section 23(2) should be given separately to each co-owner. It is the said dispute which is re!]ected in the question referred G

or the opinion of the High Court. . ·

. . ' . We may state imnlediately that such a .dispute would not really arise . ..__after from the assessment year 1976 77 and onwards because of the inser

lion of explanatio~ in Section 26. Disputes had arisen' before _the said explanation was inserted by Taxation Laws (Amendment) Act; 1975.

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SUPREME COURT REPORTS

[1995)3 S.C.R.

A Section 22 provides that the annual value of property consisting of any buildings and lands appurtenant thereto of which the assessee is the owner, shall be chargeable to income-taic under the head 'Income from house property'. Section 23 prescribes the manner in which the annual value has to be determined. Subsection (2), which is relevant for our B purposes, provided that where the property consists of a house in the occupation of the owner for the purposes of his own residence, the annual value of such house shall first be determined ia the same manner as if the property had been let and shall further be reduced by one-half of the amount rn determined or one t)lousand and eight hundred Rupees, whichever is less. Section 26, which is the other section relevant for our C purpose, alongwith its explanation inserted with effect from 1.4.1976, reads thus:

"Property owned by co-owners.

26. 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, such persons shall not in respect of such property be assessed as an association of persons, but the share of each such person in the income from the property as computed in accordance with sections 22 to25 shall be included in his total income.

Explanation: For the purposes of this section, in applying the provisions of sub-section (2) of Section 23 for computing the share of each such person as is referred to in this section, such share shall be computed, as if each such person is individually entitled to the relief provided in that subsection."

In our opinion, the language of Section 26, even without taking into account the explanation, is clear enough. It provides that where property consisting of buildings (or buildings and lands appurtenant thereto) is owned by two or more persons and there respective shares are definite G and ascertainable, they shall not, in respect of such property, be assessed

a• Association of persons, and that the share of each such person in the inc0me from the property as computed in accordance with Sections 22 to

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25 shall be included in his total income. Sections 22 to 25 prescribe the ·-" manner in which the income from house property has to be determined.

H We are, therefore, of the opinion that the respondent was justified in

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C.I.t. v. B.K. ALMAL [JEEV AN REDDY, J.] 173

: claiming that the deduction provided for by Section 23(2) be allowed to A

him separately from out of his share in the annual value of the said house property, inasmuch as he had a definite and ascertainable share therein.

Indeed, this very idea is made clear beyond may doubt by the explanation appended to Section 26 by the Amendment Act aforesaid.

It is brought to our notice that apart from the judgment under appeal B (reported in 106 !TR 743), Delhi and Bombay High Courts have also taken a similar view in CIT v. Shyam Sunder, 122 !TR 541 and Tu/si Das v. CIT,

(1983) CTR 324. The Calcutta High Court itself appears to have followed the judgment under appeal in CIT v. Shanti Devi !a/an, 139 !TR 152.

The appeal accordingly fails and is dismissed. No costs.

T.N.A.

Appeal dismissed . c