Commissioner of Income Tax vs Smt. Prabha Debi Bagaria

Bhagabati Prasad Banerjee, J.—The Tribunal has referred the following questions of law to this Court u/s 254(1) of the income tax Act, 1961 (''the Act''):

Whether, on the facts and in the circumstances of the case and in view of the 50 per cent undivided share in the house property at No. 5/9, Mullick Street, Calcutta donated by the assessee to Smt. Ratna Devi Bagaria Charity Trust having not been registered in favour of the Trust during the relevant assessment years 1980-81 and 1981-82, the Tribunal was justified in deleting the income from the said property included in the assessment of the assessee?

The year of assessment is 1980-81, for which the relevant period of account is the year ending on 23-3-1980.

The facts of the case as narrated by the Tribunal in the statement of case are as follows:

The assessee was 1/2 owner of the property at No. 5/9, Mullick Street, Calcutta. The other co-owner was Smt. Ratna Devi Bagaria who by her last will and testament dated 29-3-1977 created a trust in respect of her undivided half share for charitable purpose to be known as Smt. Ratna Devi Bagaria Charity Trust having its office at 23A, Netaji Subhas Road, Calcutta. The last will and testament of Smt. Ratna Devi Bagaria was probated by the High Court by its decision dated 23-12-1982. The other half owned by the assessee was also given to the said trust by a deed of declaration dated 3-12-1977. The assessee during the assessment years 1980-81 and 1981-82 did not show any income from the property at No. 5/9, Mullick Street. The ITO following his order for the assessment year 1978-79 took the income from the house property at Rs. 6,876in each year. The income from those property so taken by the ITO has been confirmed by the Commissioner (Appeals).

The assessee''s counsel filed a copy of the conveyance deed as well as copy of the declaration and the assessment order of Smt. Ratna Devi Bagaria Charity Trust for the assessment years 1979-80 to 1981-82 and urged that though the conveyance deed was not executed by Smt. Ratna Devi Bagaria and Smt. Prabha Devi Bagaria when the property was given to the trust but the trust being assessed on the income from house property since it took over the property from the two donors. The assessee''s counsel stated that as the income from the house property was taxed in the hands of the recipient it was unnecessary litigation and, therefore, the income included by the ITO should be deleted. The departmental representative referring to the decision in Commissioner of Income Tax Vs. Ganga Properties Ltd., urged that the assessee only should be assessed for income from the house property.

After hearing both the sides, the Tribunal concluded the matter by the following order:

The fact is that Smt. Ratna Devi and Smt. Prabha Devi were co-owners in respect of the property at 5/9, Mullick Street, Calcutta. Smt. Ratna Devi by her will dedicated the property to Smt. Ratna Debi Bagaria Charity Trust. Subsequently, Smt. Prabha Devi also followed the same. The trust becomes the owner by the declaration for which the conveyance deed has been executed much later on. The factual position on the basis of the assessment order of the trust which has been filed before the Tribunal is clear that the trust immediately on taking over the possession of the property has disclosed the rent in the assessment which has been duly assessed by the ITO. The income tax Officer on the same income cannot be collected from the two persons. In other words, the double taxation is not permissible under the income tax Act. Even though the property has not been transferred in the name of the transferee or the donee but the donee has exercised all its rights and has disclosed the rent as its income and it has already been taxed in its assessment. The assessee has filed the assessment order of the trust for the assessment years 1979-80 to 1981-82. It was also declared by the counsel of the assessee in the open Court that the income is always assessed in the hands of the trust from the said property. Under the circumstances, after considering the facts and having in mind that the same income cannot be assessed twice, the income taken in the assessment of the assessee from the said property is deleted.

In this particular case, the ITO had assessed the trust in respect of the Income of half portion of the property in respect of which assessment was already made upon the assessee with regard to his half portion of the property. Thus, the ITO taxed twice in respect of the same income with regard to the same property in the hands of two different persons. The ITO had no jurisdiction to impose tax in respect of the same property and in respect of the same income twice.

We are of the view that the Tribunal has taken a correct view of the matter and we do not find any infirmity in the order.

The question of law, referred to, is, therefore, answered in the affirmative and in favour of the assessee. There will be no order as to costs.

Sen, J. -

I agree.