Income from licence of property is income from other source and not from house property

0 comments Thursday, February 9, 2012

I find the following judgement of Karnataka High Court to be an important one, wherein it has been held that income from licence of property should be treated as income under the head other source and not under house property, hence sharing for the readers of the blog.

FACTS
Under license agreement, the assessee granted license of the scheduled property to the licensee, which, in consideration, agreed to part with 25 per cent of room income collected from the room guests to the assessee. The assessee had shown the said income under the head 'other sources' and had claimed expenses. The Assessing Officer, however, treated that income as income from house property. The Commissioner (Appeals) allowed the assessee's appeal holding that having regard to the terms of the agreement and the facts and circumstances of the case the assessee had rightly shown the income derived under the licensing agreement as income from other sources and the Assessing Officer was not justified in treating the said income as income from house property. The Tribunal confirmed the order of the Commissioner (Appeals).
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Assessment order without signature of Assessing Officer is invalid

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Section 292B of Income tax Act, 1961 provides that Return of income, etc., not to be invalid on certain grounds.—No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.

Thus if there is any mistake or omission or defect in any assessment, notice return, etc, then such notice assessment, return etc will not become invalid merely by such omission, defect or mistake.
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Word 'individual' used in clause (b) of proviso to section 56(2)(vi) includes only bride or bridegroom

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Chandigarh ITAT has held in the following case that the word Individual used in clause (b) of proviso to section 56(2)(vi) of Income Tax Act, 1961 is referred to the bridegroom and bride. In this case the assessee received gift cheques in his own name on the occasion of marriage of his daughter, which were held to be his income as gifts from non-reletives exceeding Rs. 50000 in a year.It is held that the gift received on one’s own marriage only are exempted.

Facts: During the previous year relevant to the assessment year 2007-08, the assessee on the occasion of the marriage of his daughter received a certain amount through cheques from NRI friends and relatives as shaguns/gifts. The Assessing Officer having noticed (i) that the said amount had been received on the occasion of assessee's daughter marriage and not on the marriage of the assessee, and (ii) that the cheques were in the name of the assessee and the same were credited by the assessee to his bank account, invoked the provisions of section 56(2)(vi) and treated the aggregate gifts exceeding Rs. 50,000 as the assessee's income from other sources. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer.
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