My client owns a one-third share in the house he lives in with his brothers. The officer has computed the relief on the whole property and then split the balance three ways. Is that right?
No. Where a house is owned by two or more persons whose respective shares are definite and ascertainable, section 26 requires the share of each person in the income computed under sections 22 to 25 to be included in his own total income, and the relief under section 23(2) is available to each co-owner separately out of his own share — not once over the whole property. The Supreme Court held the language of section 26 is clear enough even without the Explanation added to it in 1976, which puts the same result beyond doubt.
Decided by the Supreme Court (B.P. Jeevan Reddy J and G.T. Nanavati J) on 1995-04-04, reported as 1995 SCC (3) 525; JT 1995 (3) 425; AIRONLINE 1995 SC 114; judgment under appeal reported at 106 ITR 743. It bears on section 26, section 22, section 23, section 23(2), section 256(1) of the Income Tax Act 1961, in House Property and How Tax Law Is Read matters.
This is the Supreme Court's own statement of what section 26 does, and it does two things at once: it forbids assessing co-owners as an association of persons, and it requires the section 22 to 25 computation to be worked through for each co-owner's share so that each gets the benefits of the computation in his own right. The trap in reading the case today is the section it turns on. The section 23(2) relief in 1962-63 was a reduction of one-half of the annual value or Rs 1,800, whichever was less; section 23(2) now gives a nil annual value for a self-occupied house, and section 23(4) as amended by the Finance Act 2019 limits that to two houses from AY 2020-21. The Explanation to section 26 still stands and still directs that in applying section 23(2) each co-owner is treated as individually entitled to the relief, so the holding carries straight across — each joint owner of a self-occupied house gets the nil annual value for his own share. The same reading of section 26 is what underlies the practice of allowing the section 24(b) interest ceiling to each co-owner separately, but that point was not before the Court and this decision does not decide it.
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For assessment year 1962-63 the assessee owned an undivided one-third share in a house property. He occupied the house for his own residence along with his brother and the other co-sharers. In making his assessment the Income-tax Officer deducted the amount specified in section 23(2) from the annual letting value of the whole house and then apportioned the balance annual letting value among the co-owners. The assessee's case was that the section 23(2) deduction should be given separately to each co-owner. The Calcutta High Court, on a reference under section 256(1), answered the question in favour of the assessee, and the Revenue appealed to the Supreme Court. The Court noted that the dispute would not really arise for assessment year 1976-77 and onwards, because of the Explanation inserted in section 26 by the Taxation Laws (Amendment) Act 1975 with effect from 1 April 1976.
The Revenue's appeal was dismissed with no order as to costs. Where property is owned by two or more persons whose respective shares are definite and ascertainable, section 26 prevents their being assessed as an association of persons and requires the share of each in the income from the property, computed in accordance with sections 22 to 25, to be included in his total income; the assessee having a definite and ascertainable share was accordingly entitled to the section 23(2) deduction separately out of his own share of the annual value (paragraphs 5 and 7).
The Court read section 26 as clear on its own terms, without needing the Explanation. Sections 22 to 25 prescribe the manner in which income from house property is to be determined; section 26 directs that where shares are definite and ascertainable, the share of each such person in the income from the property 'as computed in accordance with sections 22 to 25' shall be included in his total income. It follows that the computation, including the section 23(2) reduction, is to be worked for each co-owner's share and not once for the property as a whole (paragraphs 4 and 5). The Explanation appended by the 1975 amendment, which says in terms that in applying section 23(2) the share is to be computed as if each such person is individually entitled to the relief, was treated as making the same idea clear beyond any doubt rather than as changing the law (paragraphs 3 and 5). The Court noted that the Delhi and Bombay High Courts had taken the same view in Shyam Sunder (122 ITR 541) and Tulsi Das ((1983) 63 CTR 324), and that the Calcutta High Court had followed the judgment under appeal in CIT v. Shanti Devi Jalan (139 ITR 152) (paragraph 6).
We are, therefore, of the opinion that the respondent was justified in claiming that the deduction provided for by Section 23(2) be allowed to him separately from out of his share in the annual value of the said house property, inasmuch as he, had a definite and ascertainable share therein.
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Handle my notice → Ask a CA on WhatsAppNo. Where a house is owned by two or more persons whose respective shares are definite and ascertainable, section 26 requires the share of each person in the income computed under sections 22 to 25 to be included in his own total income, and the relief under section 23(2) is available to each co-owner separately out of his own share — not once over the whole property. The Supreme Court held the language of section 26 is clear enough even without the Explanation added to it in 1976, which puts the same result beyond doubt. This was decided by the Supreme Court (B.P. Jeevan Reddy J and G.T. Nanavati J) and bears on section 26, section 22, section 23, section 23(2), section 256(1) of the Income Tax Act 1961. It is reported as 1995 SCC (3) 525; JT 1995 (3) 425; AIRONLINE 1995 SC 114; judgment under appeal reported at 106 ITR 743. This is the Supreme Court's own statement of what section 26 does, and it does two things at once: it forbids assessing co-owners as an association of persons, and it requires the section 22 to 25 computation to be worked through for each co-owner's share so that each gets the benefits of the computation in his own right. The trap in reading the case today is the section it turns on. The section 23(2) relief in 1962-63 was a reduction of one-half of the annual value or Rs 1,800, whichever was less; section 23(2) now gives a nil annual value for a self-occupied house, and section 23(4) as amended by the Finance Act 2019 limits that to two houses from AY 2020-21. The Explanation to section 26 still stands and still directs that in applying section 23(2) each co-owner is treated as individually entitled to the relief, so the holding carries straight across — each joint owner of a self-occupied house gets the nil annual value for his own share. The same reading of section 26 is what underlies the practice of allowing the section 24(b) interest ceiling to each co-owner separately, but that point was not before the Court and this decision does not decide it. If it applies to you, the first step is this: Prove definiteness of the shares first — the sale deed, the conveyance, the registered partition or the succession record showing the fraction each co-owner holds. Section 26 applies only where the respective shares are definite and ascertainable.
For assessment year 1962-63 the assessee owned an undivided one-third share in a house property. He occupied the house for his own residence along with his brother and the other co-sharers. In making his assessment the Income-tax Officer deducted the amount specified in section 23(2) from the annual letting value of the whole house and then apportioned the balance annual letting value among the co-owners. The assessee's case was that the section 23(2) deduction should be given separately to each co-owner. The Calcutta High Court, on a reference under section 256(1), answered the question in favour of the assessee, and the Revenue appealed to the Supreme Court. The Court noted that the dispute would not really arise for assessment year 1976-77 and onwards, because of the Explanation inserted in section 26 by the Taxation Laws (Amendment) Act 1975 with effect from 1 April 1976. The matter was decided on 1995-04-04 by the Supreme Court (B.P. Jeevan Reddy J and G.T. Nanavati J). On those facts the Supreme Court held as follows. The Revenue's appeal was dismissed with no order as to costs. Where property is owned by two or more persons whose respective shares are definite and ascertainable, section 26 prevents their being assessed as an association of persons and requires the share of each in the income from the property, computed in accordance with sections 22 to 25, to be included in his total income; the assessee having a definite and ascertainable share was accordingly entitled to the section 23(2) deduction separately out of his own share of the annual value (paragraphs 5 and 7).
The Court read section 26 as clear on its own terms, without needing the Explanation. Sections 22 to 25 prescribe the manner in which income from house property is to be determined; section 26 directs that where shares are definite and ascertainable, the share of each such person in the income from the property 'as computed in accordance with sections 22 to 25' shall be included in his total income. It follows that the computation, including the section 23(2) reduction, is to be worked for each co-owner's share and not once for the property as a whole (paragraphs 4 and 5). The Explanation appended by the 1975 amendment, which says in terms that in applying section 23(2) the share is to be computed as if each such person is individually entitled to the relief, was treated as making the same idea clear beyond any doubt rather than as changing the law (paragraphs 3 and 5). The Court noted that the Delhi and Bombay High Courts had taken the same view in Shyam Sunder (122 ITR 541) and Tulsi Das ((1983) 63 CTR 324), and that the Calcutta High Court had followed the judgment under appeal in CIT v. Shanti Devi Jalan (139 ITR 152) (paragraph 6). In the words reproduced by the source cited on this page: "We are, therefore, of the opinion that the respondent was justified in claiming that the deduction provided for by Section 23(2) be allowed to him separately from out of his share in the annual value of the said house property, inasmuch as he, had a definite and ascertainable share therein." The decision followed or applied CIT v. Shyam Sunder (122 ITR 541) (Delhi High Court) — noted with approval; Tulsi Das v. CIT ((1983) 63 CTR 324) (Bombay High Court) — noted with approval; CIT v. Shanti Devi Jalan (139 ITR 152) (Calcutta High Court) — noted.
It was decided by the Supreme Court on 1995-04-04 and is reported as 1995 SCC (3) 525; JT 1995 (3) 425; AIRONLINE 1995 SC 114; judgment under appeal reported at 106 ITR 743. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 26, section 22, section 23, section 23(2), section 256(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Revenue's appeal was dismissed with no order as to costs. Where property is owned by two or more persons whose respective shares are definite and ascertainable, section 26 prevents their being assessed as an association of persons and requires the share of each in the income from the property, computed in accordance with sections 22 to 25, to be included in his total income; the assessee having a definite and ascertainable share was accordingly entitled to the section 23(2) deduction separately out of his own share of the annual value (paragraphs 5 and 7). It arises in House Property and How Tax Law Is Read matters, on section 26, section 22, section 23, section 23(2), section 256(1) of the Income Tax Act 1961, and was decided by B.P. Jeevan Reddy J and G.T. Nanavati J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the officer has assessed the co-owners as an association of persons, take the point that section 26 forbids it; a return filed in AOP status does not cure the defect and does not create a charge that the Act does not make. Where the property is self-occupied, claim the section 23(2) relief separately for each co-owner's share and cite the Explanation to section 26 alongside this judgment. Check the year before relying on the self-occupation relief at all: only one house could be taken at nil until AY 2019-20, and two from AY 2020-21 under section 23(4) as amended by the Finance Act 2019. Do not stretch the case beyond section 23(2). For section 24(b) interest, argue from section 26's requirement that the section 22 to 25 computation be applied to each share, and say plainly that this judgment decided the section 23(2) question.
Still good law. The result the Court reached is now written into the statute: the Explanation to section 26, inserted by the Taxation Laws (Amendment) Act 1975 with effect from 1 April 1976, directs in terms that in applying section 23(2) the share of each co-owner is to be computed as if each is individually entitled to the relief, and that Explanation remains on the statute book. What has changed underneath is section 23(2) itself, which no longer gives the half-or-Rs 1,800 reduction the Court was construing but a nil annual value for a self-occupied house, subject to the limit in section 23(4) — one house until AY 2019-20 and two from AY 2020-21 after the Finance Act 2019. I did not carry out a search for later decisions doubting or distinguishing this judgment, so this note is not a certification that none exists. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The report cites the Delhi High Court decision the Supreme Court referred to as 'MIT v. Shyam Sunder (122 ITR 541)'; that is plainly a transcription slip for CIT v. Shyam Sunder. The Court records the Calcutta High Court judgment under appeal as reported at 106 ITR 743. The reported citations recovered are 1995 SCC (3) 525, JT 1995 (3) 425 and AIRONLINE 1995 SC 114; no ITR citation appeared in the text retrieved, so none is given here. The judgment is short — eight paragraphs — and the whole of it was read. The stray comma in 'inasmuch as he, had' is as printed. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeal was dismissed with no order as to costs. Where property is owned by two or more persons whose respective shares are definite and ascertainable, section 26 prevents their being assessed as an association of persons and requires the share of each in the income from the property, computed in accordance with sections 22 to 25, to be included in his total income; the assessee having a definite and ascertainable share was accordingly entitled to the section 23(2) deduction separately out of his own share of the annual value (paragraphs 5 and 7).
TaxSphere, “CIT v Bijoy Kumar Almal”, https://taxnotice.vittsphere.com/caselaw/case/cit-v-bijoy-kumar-almal-co-owners-separate-relief/ (validity last checked 2026-09-07)
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