TMI Blog1980 (9) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... his contention and held that the income from the house property in holding No. 401 should be excluded from the total income of the assessee. The revenue in appeal to the Tribunal contended that according to s. 27 of the I.T. Act, 1961 (hereinafter "the 1961 Act"), an individual who transfers other wise than for adequate consideration any house property to his spouse shall be deemed to be the owner of the house property so transferred and consequently the inclusion of the income from the property in the total income of the assessee was justified and should be restored. The assessee opposed this contention pleading that the provisions of s. 27 of the 1961 Act could not apply to the transaction of the assessee and it took place before the coming into force of the 1961 Act specially when there was no analogous section in the repealed Indian I.T. Act, 1922. The Tribunal, however, held that the provisions of s. 27 were applicable since the assessment related to the assessment year 1969-70, when that section was very much in the statute book. The assessee applied on April 15, 1976, requiring the Tribunal to draw up a statement of the case and to refer the question set out in annex. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question as it arises from the order of the Tribunal. Admittedly, the ITO in his assessment order did not give any reason for the inclusion of Rs. 675 as income of the assessee in respect of holding No. 401. The AAC also, without referring to any section of the 1961 Act, observed: " As regards the other property being holding No. 401, it is the case of counsel that the property was transferred to the wife of the appellant in 1954 and at no stage in the earlier year it has been held by the department that the income from the property would be taxable as income of the appellant. This year there is a change and without mentioning any reasons, the income from the said property has been included in the total income of the appellant. In this view the action of the ITO also cannot be upheld. " From the above observations it could not be definitely said that only s. 27 of the 1961 Act was applied. The Tribunal, however, holds that the case of the assessee comes within the provisions of s. 64(iii) read with s. 27 of the Act. Considering the above facts, instead of refusing to answer the question as referred, we reframe the question as under: " Whether, on the facts and in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lute, the assessee cannot be deemed to be the owner of that property by virtue of s. 27, nor can the gift be deemed to be a transfer without adequate consideration for the purpose of s. 64(iii) or s. 27 of the 1961 Act. A statute is retrospective when it takes away or impairs any vested right acquired under the existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect of transactions or considerations already past. But a statute is not retrospective because a part of the requisites for its action is drawn from time antecedent to its passing. In the instant case the question of validity or ownership of the property transferred by the assessee is not in issue. The subject-matter of taxation is the income arising from the house property in holding No. 401 for the assessment year 1969-70. This income cannot be said to have arisen prior to its previous year. This income is the requisite for action in the assessment year 1969-70. The principle of inclusion of the income in the total income of the assessee is based on a past action of the assessee in respect of the source of the income, namely, holding, No. 401. As such, when the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such individual is a partner." In Raja Ajai Varma v. Assessing Authority [1964] 51 ITR 308, the Allahabad High Court dealing with s. 4A of the U.P. Agrl. I.T. Act, which was similar to s. 16(3) of the 1922 Act, observed (p. 312): " On a plain reading of the section there is little or no scope for the contention that the income for the assessment year after the insertion of section 4A in 1953, from the assets transferred before 1953 by the assessee, would not stand to be included in the assessment of the transferor who otherwise satisfies the conditions of this section. This section, prima facie, has no concern with the date of the transfer of the assets but only with the income of the transferred assets in the relevant year of assessment. The section casts its net wide enough to embrace in its sweep income from assets which may have been transferred before the enactment of Act XIV of 1953." From the above observations there is no doubt that there is no question of giving retrospective effect to s. 64(iii) or s. 27 in the instant case. There is also no need for questioning the title or ownership of the spouse. The sections only provide for a principle of computation and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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