50% of rent is taxable in wife’s hand if sale deed doesn’t specify her share in joint property: ITAT

Case Details: Smt. Shivani Madan v. Assistant Commissioner of Income-tax, Central Circle-5 - [2023] 147 taxmann.com 423 (Delhi-Trib.)

Judiciary and Counsel Details

• • Ms Astha Chandra, Judicial Member & Anil Chaturvedi, Accountant Member
  • Sahil Sharma & Ms Jyoti Sharma, Advs. for the Appellant.
  • H.K. Choudhary, CIT-DR for the Respondent.

Facts of the Case

A search was conducted on the premises of the assessee. The search revealed that the assessee was a joint owner of a property along with her husband. However, the assessee didn’t disclose income from such house property while filing return of income.

Since the registered sale deed of the property had not defined shareholding between the co-owners, the Assessing Officer (AO) considered 50-50 ownership of the property between the assessee and her husband. Accordingly, he assessed 50% of rental income in the hands of the assessee.

Assessee contended that she made a minor contribution to the acquisition of such house property. Thus, taxing 50 percent of house property income in hands of the assessee was not justified.

Aggrieved assessee preferred an appeal to the CIT(A) wherein the additions were confirmed. The matter reached the Delhi Tribunal.

ITAT Held

The Tribunal held that the ownership is considered as per the mutation records. The sale deed only mentioned the fact that the assessee is a co-owner of the property but the share of each co-owner was not definite and ascertainable. No name has been mentioned and the entire consideration of Rs. 3.50 crores was paid by the vendee, namely both the co-owners husband and wife.

The contention of the assessee that her share is limited to the amount paid by her (approximately 5.4%) is baseless as the facts and circumstances do not affirm such a fact.

The Hon’ble Allahabad High Court in Saiyad Abdulla v. Ahmad AIR 1929 All 817, has held that in the absence of specification of the shares purchased by two persons in the sale deed, it must be held that both purchased equal shares.

Following such a decision it must be held that the husband and wife purchased equal shares. Therefore, AO was justified in bringing to tax 50% of the income from house property in the hands of the assessee.