Law:

Section:

Section 64 of the Income-tax Act, 1961 - Transfer of assets - For benefit of spouse or minor child - Assessment year 1977-78 - Assessee's wife declared that she constructed a house by obtaining a loan of Rs. 82,120 from assessee - As to source of aforesaid loan, assessee contended that he got Rs. 23,137 under succession certificate granted to him on death of his father, which was invested in National Savings Certificates in different names from time to time - Whether corpus as well as accretions of aforesaid investment did not change character of ancestral property and, therefore, so much of investment made in house property in question as was attributable to said sum of Rs. 23,137 must be regarded as a HUF property and so much income of house property in question as bore proportion to aforesaid investment was not assessable in hands of assessee - Held, yes FACTS For the assessment year 1977-78, the assessee declared in his return that his wife had constructed a house for about Rs. 1,10,000, out of loans and advances and savings. The assessee's wife also filed her individual return. Regarding the investment in the construction of house property, the assessee relied upon the contention raised by his wife in her case that it included a sum of Rs. 82,120 taken from the assessee. On sources of the funds, the assessee claimed that he received a sum of Rs. 23,137, under succession certificate granted to him on the death of his father and another sum of Rs. 16,000 under family settlement from his cousins in lieu of his share in the father's property. The ITO held that the alleged loan given by the assessee was without normal consideration of interest and as such the assessee was the real owner of the house property. He accordingly added certain amount as income from the house-property in question. On appeal, the AAC deleted the addition. On appeal by the revenue, the Tribunal held that the amount of Rs. 16,000 received as a result of family settlement had not been established in absence of the original family settlement deed, and as the assessee treated the amount as individual property and obtained National Savings Certificates in various names from time to time, he…

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