Law:

Section:

Section 64, read with section 27 of the Income-tax Act, 1961 - Transfer of assets - For benefit of spouse, etc. - Assessment years 1970-71 and 1971-72 - Assessee settled certain house property on trust for benefit of his wife and children - Assessee continued to live in that house - Whether ownership of said property continued to be that of assessee under section 27(i) and notional income therefrom could be included in total income of assessee under section 64(v) - Held, yes FACTS By a deed of indenture dated 5-3-1962, the assessee, an individual, settled his property in trust for the benefit of his wife and children. Under the said deed, the trustees were directed to pay the income of the said trust property to the assessee's wife during here lifetime and thereafter to his children after meeting the outgoings like rates, taxes, etc. The assessee continued to live in the said property. For the first time in the relevant assessment years, the assessee claimed that the income from the said property should not be included in his total income. It was found by the ITO that in the past the income from the said property was included in the total income of the assessee and, in fact, he enjoyed the rent therefrom up to the assessment year 1966-67. He, therefore, included the value of the dwelling house, in the total income of the assessee. On appeal, the AAC deleted the additions holding that the ownership related to the trust and notwithstanding that the assessee resided in the same house, income could not be added to his own income. On Revenue's appeal, the Tribunal observed that section 64(v ) was the section which the AAC ought to have considered while deciding the appeal and that section 64 applied to both revocable as well as irrevocable transfers. As regards the submissions of the assessee about the ownership of the house property in question, the Tribunal referred to section 27(1) and held that the income from the said property was includible in the assessee's income. On reference : HELD The Tribunal had rightly applied section 64(v ) in the instant case and accordingly, income from trust property was includible in the total income of the assessee. Note : The…

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