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Swapna Murarka Versus ACIT 12 (1) Mumbai

2015 (9) TMI 706 - ITAT MUMBAI

Income from the house property shown by the assessee on letting out the property on rent to her husband - whether is a colourable transaction and therefore, the same is assessable under the head, “income from other sources” - Held that:- The entire finding of the AO as well as Ld. CIT(A), that it is a colourable transaction is without any merits and examining the case of the husband. If at all the revenue had any doubt about such arrangement, then both the cases of husband and wife should have b .....

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out the property is to be taxed under the head “income from house property” - Decided in favour of assessee.

Disallowance made u/s 14A read with Rule 8D - Held that:- Assessee has shown income under the head salary, income from house property, capital gains and interest income, which is mainly from saving bank account and FDR. From the perusal of the P&L Account, it is seen that assessee has debited ₹ 1,52,835/- on share transaction charges and STT charges of ₹ 2,89,148/- .....

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ee for statistical purposes . - ITA No. 3218/Mum/2012 - Dated:- 27-3-2015 - SHRI D. KARUNAKAR RAO AND SHRI AMIT SHUKLA, JJ. For The Appellant : Shri Arun Sathe & Ms. Aarti Sathe For The Respondent : Shri Neil Philip ORDER PER AMIT SHUKLA, JM: This appeal has been filed by the Assessee against order dated 07.03.2012, passed by Ld. CIT(A)-23, Mumbai for the quantum of assessment passed u/s 143(3) for the A.Y. 2008-09. 2. In ground No. 1 to 3, the assessee is mainly aggrieved by the finding of .....

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of income also included income from house property computed at ₹ 12,65,575/- on a gross rent of ₹ 18,25,000/-. On the verification of the details of rent, the AO noted that assessee has received the rent from her husband in respect of the property which was also occupied by the assessee herself. He observed that the assessee has received rent from her husband in respect of self occupied property and therefore, there is no relationship of lessor and lessee. Accordingly, he held that t .....

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t the assessee should be the owner of the house property and if such a house property had generated income then it has to be taxed under the head income from house property. There is no prohibition under the law, if the wife lets out her property to her husband on rent, then such rental receipts ceases to the income from house property. It was further submitted that, if the rent received from the husband is not accepted, then it should be treated as gift but under no circumstances it can be trea .....

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at under the Hindu Adoptions and Maintenance Act, 1956 , it is the duty of the husband to provide residence and maintenance of the wife. Thus, when the assessee was residing with her husband, then she was under a conjugal right and the responsibility of maintenance is with the husband, which also includes providing residence. Otherwise also, there is no prohibition under the Act that wife cannot charge rent from her husband. Here in this case the property is owned by the assessee and the assesse .....

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tted that the property was self occupied and therefore its income has to be taken at Nil . Further when the assessee herself residing with her husband then under the guise of rent the assessee is receiving money from her husband and claiming statutory deductions u/s 24(b). This is nothing but colourable device to avoid tax. 7. We have heard the rival submissions also perused the relevant finding given in the impugned order. It is an undisputed fact that the assessee is owner of the property, whe .....

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s. Strong reliance has been placed by the department on subsection (2) of section 23 which reads as under:- 23 (2) Where the property consists of a house or part of a house which- (a) is in the occupation of the owner for the purposes of his own residence; or (b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, the annual value .....

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ing value at Nil is to be claimed by the assessee. However, if the assessee has let out the self occupied property, then subsection (2) will not apply. This has been specifically provided in subsection (3) of section 23. If the assessee has claimed that self occupied property has been let out and rent has been received then the annual value cannot be deemed at Nil . Here in this case, the main allegation of the revenue that transaction between the husband and wife is colourable transaction to re .....

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e from her husband and if such a money was not rent, then it can be treated as gift from a husband to his wife. How can it be treated as income from other sources. The entire finding of the AO as well as Ld. CIT(A), that it is a colourable transaction is without any merits and examining the case of the husband. If at all the revenue had any doubt about such arrangement, then both the cases of husband and wife should have been examined. If the money received by the assessee has been shown by lett .....

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Accordingly, the ground raised by the assessee is allowed. 8. In Ground no. 4, the assessee has challenged the disallowance made u/s 14A read with Rule 8D. The assessee has earned dividend income of ₹ 13,18,704/- which was claimed as exempt. In the computation of income, the assessee has not offered any disallowance u/s 14A. Accordingly, AO held that the disallowance has to be worked out in accordance with the Rule 8D and worked out the disallowance at ₹ 3,66,782/- by working out 0. .....

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