Section 26 — the law in short
What the courts have decided on section 26, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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CIT v Bijoy Kumar Almal
Supreme CourtHelps taxpayer
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.
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CIT v Smt Indira Balkrishna
Supreme CourtHelps taxpayer
Several of us inherited property jointly and receive the dividends and interest together. Can the department assess us as an association of persons?
No, not on mere joint receipt. The Supreme Court held that an association of persons under section 3 of the 1922 Act means two or more persons who join in a common purpose or common action, and because the words appear in a charging section, the object of the association must be to produce income, profits or gains. It must be a combination formed for the promotion of a joint enterprise. Three co-widows who inherited an estate as joint tenants, did not divide it, and simply received dividends and interest jointly were held not to be an association: they had done no act which helped to produce the income.
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Shivani Madan v PCIT
High CourtHelps taxpayerValidity unconfirmed
My husband and I are both on the sale deed. Must half the annual value be taxed on me?
No. The Delhi High Court held that merely signing the instrument of conveyance raises no presumption that the income is to be assessed in that person's hands; taxability must reflect who actually obtained the benefit of the property, so an equal share cannot be assumed where the deed is silent.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.