Signing of Instrument of Conveyance Doesn’t Raise Any Presumption of Income to Be Assessed in Hands of Other Co-Owner | HC

Case Details: Smt. Shivani Madan vs. Principal Commissioner of Income-tax - [2025] 171 taxmann.com 347 (Delhi)

Judiciary and Counsel Details

• Yashwant Varma & Harish Vaidyanathan Shankar, JJ.
• Ms Hasneeta Matta, Prateek Kumar & Ms Ankita, Advs. for the Appellant.
• Sunil Kumar Agarwal, SSC, Shivansh B. Pandya, Viplav Acharya, Ms Priya Sarkar & Utkarsh Tiwari, Advs. for the Respondent.

Facts of the Case

The assessee and her husband had joint ownership of a property. Assessing Officer (AO) held that the property would be liable to be viewed as being jointly owned in equal share by the assessee and her spouse and thus taxed in accordance with section 23(1)(a). Accordingly, he computed the annual letting value and 50 per cent thereof being assessed in the hands of the assessee.

On appeal, the Commissioner (Appeals) affirmed the order of the Assessing Officer. Later, the Tribunal also affirmed the view holding that since co-ownership of assessee and her husband was evidenced in sale deed but there was no specification of their respective shares in deed, it must be held that husband and wife purchased equal shares.

The matter reached before the Delhi High Court.

High Court Held

The Delhi High Court held that section 26 speaks of apportionment and ascertainment of the extent of income that can arise in an assessee’s hands in cases where the respective shares are defined or are ascertainable. Section 27 also defines as to what meaning is to be ascribed to the expression ”owner of house property.

As is manifest and evident from a reading of provisions, the Income-tax Act fails to raise any presumption in law of income necessarily arising or being liable to be assessed in the hands of an individual merely because it be a signatory to an instrument of conveyance.

The question of taxability would necessarily have to be answered bearing in mind the individual who had in fact obtained benefits from the property. In the absence of any finding in tune with the above having been rendered insofar as the assessee is concerned, the order of the Tribunal cannot be sustained. Accordingly, the instant appeal was allowed, and the order of the Tribunal was set aside.

List of Cases Reviewed

• Smt. Shivani Madan v. ACIT [2023] 147 taxmann.com 423 (Delhi – Trib.)/[2023] 200 ITD 198 (Delhi – Trib.) [para 11] reversed.
• Commissioner of Income Tax, Bombay v. Podar Cement Pvt. Ltd. and Others (1997) 5 SCC 482 [para 8] followed.

List of Cases Referred to

• CIT v. Podar Cement Pvt. Ltd. and Others (1997) 5 SCC 482 (para 7).