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Smt. Sabita Mohan Nagpal Vs. the Commissioner of Income Tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberD.B. IT Ref. No. 43 of 1977
Judge
Reported in1985WLN(UC)41
AppellantSmt. Sabita Mohan Nagpal
RespondentThe Commissioner of Income Tax
Excerpt:
.....mohan nagpal and that no over-riding title with regard to 50% of the rental income from the said immovable property accrued and arose in favour of nitin mohan and niren mohan.;reference answered accordingly - dwarka prasad gupta, j.1. this reference has been made by the income-tax appellate tribunal, jaipur bench, jaipur by its order dated april 30, 1 77 referring to this court the following two questions, arising out of the order of the appellate tribunal dated april 22, 1976:(1) whether on the facts and in the circumstances of the case the tribunal is justified in holding that smt. sabita mohan nagpal owned the plot no. 25/2e, jhandewalan extension, block 2,new delhi and the building ejected there on and that svs. nitin mohan and niran mohan were merely nominees of smt. sabita mohan nagpal ?(2) whether on the facts and in the circumstances of the case, the tribunal was justified in holding that the income arising from the said building belonged exclusively to smt. sabita mohan nagpal and.....
Judgment:

Dwarka Prasad Gupta, J.

1. This reference has been made by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur by its order dated April 30, 1 77 referring to this Court the following two questions, arising out of the order of the Appellate Tribunal dated April 22, 1976:

(1) Whether on the facts and in the circumstances of the case the Tribunal is justified in holding that Smt. Sabita Mohan Nagpal owned the plot No. 25/2E, Jhandewalan Extension, Block 2,New Delhi and the building ejected there on and that Svs. Nitin Mohan and Niran Mohan were merely nominees of Smt. Sabita Mohan Nagpal ?

(2) Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the income arising from the said building belonged exclusively to Smt. Sabita Mohan Nagpal and that no over-riding title with regard to 50% of the said income had accrued and arisen in favour of Svs. Nitin Mohan and Niren Mohan in terms of the partnership deeds 5-11-64 and 31-12-1969 ?

2. It is not necessary for us to give in details the facts of the case or to discuss the legal questions involved there in detail. It would be sufficient to say that the present reference arises out of the assessment of Smt. Sabita Mohan Nagpal relating to the assessment yr. 1970-71 and 1971-72 in respect of the income from house property situated at No. 25 Jhandewalan, Extension, Block 2, New Delhi. A similar question relating to the income of the assessee from the aforesaid property in respect of the assessment year 1965 66 was subject matter of decision by the order of the Appellate Tribunal dated February 18, 1972 in Income-tax Appeals Nos. 749 and 750 of 1971-72. A reference was made by the Appellate Tribunal to this Court in respect of similar questions arising out of its order relating to the assessment years 1965-66 and that reference was decided by a Bench of this Court, to which one of us was a party, by the order dated 4-4-84 (See : 1984 WLN 278).

3. The Appellate Tribunal while deciding the appeals relating to the assessment years 1970-71 and 1971-72 relied upon its earlier decision given in the appeal relating to the assessment year 1965-66 and held on the basis of its earlier decision that no over-riding title accrued or arose in favour of Serve Shri Nitin Mohan and Niran Mohan, because the partnership deed did not bring into existence a valid partnership. The Tribunal also held that the claim of the assessee under Section 24(vi) was untenable, for the property in question was not subjected to an annual charge with regard to the payment to the two sons of the assessee.

4. This court, while deciding the reference arising out of assessment proceedings relating to the assessment year 1965-66, disagreed with the view taken by the Appellate Tribunal and held that on account of the agreement dated November 5, 1964 an over-riding interest was created which may not be in the nature of charge on the properly, yet, the same constituted an obligation created by a paramount title. It was further held by this Court that the Appellate Tribunal was not justified in holding that payment of 50% of the share of the rents of the property situated at No. 25, Jhandewalan Extension, Blook 2, New Delhi to Nitin Mohan under the agreement dated 3-11-64 was not a case of diversion of such amount before the same reached the assessee. It was observed that it was a clear case of diversion of the part of the rental income by an over riding or superior tile, before the same could constitute the income of the assessee. This court took the view that on account of the execution of the rent-deeds in the joint names of the assessee and Nitin Mohan, the share of Naren Mohan in the rental income never reached or formed part of the income of the assessee. Thus in the view taken by this Court, 50% of the rental income of the immovable property at No. 25, Jhandewalan Extension, Block 2, New Delhi could not have been assessed to tax in the hands of the assessee under Section 23 of the Income-tax Act, 1961. We have already pointed out above that the Appellate Tribunal in the cases relating to the assessment years 1970-71 and 1971-72 has followed its earlier view taken in the appeal relating to assessment year 1965-66 and identical questions arising out of the order of the Appellate Tribunal dated 22-4-76 have been referred in the present reference.

5. We are in agreement with the reasons given by this Court in its order dated 4-4-84 while deciding the earlier reference case No. 57/75 relating to the Assessment year 1965-66. Accordingly, adopting the reasons given in the aforesaid order dated 4-4-84 and without repeating the same, we hold that the Appellate Tribunal was not justified in coming to the conclusion that Nitin Mohan and Niren Mohan were merely nominees of Sabita Mohan Nagpal in respect of the rental income arising out of immovable property situated at 25, Jhandewalan Extension, Block, 2, New Delhi. We also find that the Appellate Tribunal was not justified in holding that the income arising out of the said building belonged exclusively to Smt. Sabita Mohan Nagpal and that no overriding title with regard to 50% of the rental income from the said immovable property accrued and arose in favour of Nitin Mohan and Niren Mohan. The reference is answered accordingly.


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