Mufti, J.
(1) The assessee is an individual. He is a partner of the firm M/s M A Ramzana in which his son, Javeed Ahmed, has been admitted to the benefits
of the partnership. The assessee owns house property which is self occupied for the residence. For the assessment year 197475, the assessee filed
his return of income and determined the annual letting value of the said property at Rs. 4,420/ but limited the assessable amount of Rs. 2, 688/ only
His contention was the 10% limit, as contemplated by section 23 (2) of the Income Tax Act, 1961 (shortly 'the Act') was relateable to the total
income of the assessee without including therein the minor's income assessable in his hands under section 64 of the Act. The IT O. repelled the
contention. On appeal, the Appellate Assistant Commissioner disagreed with the IT O and upheld the contention. Feeling aggrieved the
Department preferred an appeal before the Tribunal. The Tribunal preferred the view taken by the I. T. O and reversed the order passed by the
Appellate Assistant Commissioner observing :
Section 2 (45) defines"" total income"" as to mean the total amount of income referred to the section 5 computed in the manner laid down in the Act
Section 5 on its part brings within the ambit of total income of a person, all income from whatever sources derived which has been received or
accrued or deemed to be received or accrued in Indiaby or in behalf of such person. This section is qualified by the words ""subject to the
provisions of the act. ""In other words, the scope of ""total income"" under action 5 is not exhaustive and in case there are other provisions in the Act
enlarging the scope of total income, they have as well to be kept in view. Section 64 next postulates that in computing the total income of any
individual, there shall be included such income as arises directly or indirectly to the spouse or a minor child of such individual from membership in a
firm in which he is also a partner or from assets transferred directly or indirectly to them otherwise than for adequate consideration. This section
thus leaves without any pale of doubt that' the total income"" of any individual has to include the income which is clubbed in his hands under its
provisions.
These provisions thus, have broadened the scope of ""total income"" considerably and income deemed to be received by or on behalf of an assessee
are includible io his hands. So also the income under section 64. The latter income is deemed to be the total income of the asssessee by operation
of law.
and again as under :
Moreover the only exceptions which the proviso to Section 23 (2) envisages are envisages are that the income of the property is not to be
included and further that the deductions under Chapter VfA are to be excluded There is no other exclusion envisaged. It would therefore, not be
correct to exclude the income enjoyed under section 64. this respect, we may as well refer to section 80 B (5) of the Act which defines gross total
income There a specific exclusion of the income under section 64 has been provided for. Had the Legislature so envisaged for Section 23 (2) as
well, it would have naturally enacted so in its proviso"".
(2) At the instance of the Assessee, the Tribunal has referred the following questions of law for the opinion :
1. Whether on the facts and circumstances of the case, the Appellate Tribunal was right in holding that the term 'total income' of the owner under
the proviso to section 23 (2) includes income under section 64 ?
2 Whether on the facts and circumstances of the case, the Tribunal was right in holding that 'Total Income' as laid down in Section 5 basis of
charge of Incometax tentamounts to gross total income as defined in Section 80b (5) of the Act ?
(3) Section 23 (2) reads : ""Where the property consists of
(i) a house in the occupation of the owner for the purposes of his own residence, the annual value of such house shall first be determined in the
same manner as if the property had been let and further be reduced by onehalf of the amount so determined or one thousand and eight hundred
rupees, whichever is less :
(ii) more than one house in the occupation of the owner for the purposes of the own residence' the provisions of Cl (i) shall apply only in respect of
one of such houses, which the assessee may, at his option, specify in this behalf :
Provided that for the purposes of Ci (i) and (ii), where the sum so arrived at exceeds ten percent of the total income of the owner (the total income
for this purpose being computed without including therein any income forum such property and before making any deduction under Chapter VIA.
the excess shall be disregarded.
(4) A slight consideration of these provisions makes it clear that the benefit of the relief in respect of self occupied property is available only to an
individual assessee. No other assessable entity can claim this benefit. The reference to occupation for the purposes of ""his own residence
unmistakably shows that the owner in question must be a natural person, that is what is known in Income Tax Law as 'an individual' Therefore
when the provisospeaks of 'total income of the owner' it is in this sense that word 'owner' has been used in it. It has no other significance. It does
not limit or restrict the meaning of the expression 'total income' which has to be understood as it is defined in clause 45 of Section 2 of the Act.
Under that definition, the total income means 'total amount of income referred to in section 5 computed in the manner laid down in this Act.
Section 5 reads thus :
5. Scope of total income.(l) subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all
income from whatever source derived which:
(a) is received or is deemed to be received in India in such year by or on behalf of such person ; or
(b) accrues of arises or is deemed to accrue or arise to him in India during such year ; or
(c) accrues or arises to him outside India during such year :
Provided that, in the case of a person not ordinarily resident in India within the meaning of subsection (6) of Sec. 6, the income which accrues or
arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India.
2 Subject to the provisions of this Act, the total income of any previous year of a person who is a nonresident includes all income from whatever
source derived which (a) is received or is deemed to be received in India in such year by or on behalf of such person ; or (b) accrues or arises or
is deemed to accrue or arise to him in India during such year.
(5) This section, being subject to the provisions of this Act' is controlled by the provisions of Chapter III which has the effect of excluding from the
concept of total income various items which are otherwise income according to the general law. Therefore, by section 5 read with section 2 (45)
total income comprises the total amount of income computed in the manner laid down in the Act including all income from whatever source
derived, which accrues or arises or is received or is deemed to accrue, arise or to be received, as provided in section 5 and, which is not excluded
under chapter III. The crucial words in the definition are 'computed in the manner laid down in the Act.' The requirements of compensation of 'total
income' in the manner laid down in this Act' attracts other provisions of the Act. they are :
i Those that relate to items deemed to be the income of the assessee (Sections 7(i), 7(ii) 41 (1), 41 (4)58 to 69 B, 198).
ii. those that relate to the incomes of other persons, but which are fictionally, regarded as the income of the assessee' (Sections 60, 61, 62(2), 64 (i
to iv), 9 I) .
iii. those, that relate to incomes on which no tax is leviable but which are nevertheless included in the total income for . rate purposes (Sections 86
and 86A)
iv. .those that reiate to the deductions by way of permissible expenditure ; Chapter VIA and section 2800).
(6) Thus it would be seen that 'total income' as defined in S. 2 (45) means total amount of income as an assessee from all sources, including :
i. Incomes, other than those mentioned in Chapter III. Chargeable with tax under the Act ;
ii. Incomes chargeable with tax by way of deduction at source under section 198 ;
iii. Incomes deemed to be those of the assessee by force of certain provisions including section 64 of the Act; and
iv. Income on which no tax is leviable but which arc nevertheless included for . rate1 purposes :
But aftermaking deductions by way of permissible expenditure under Chapter VIA and section 2800 of the Act.
(7) It necessarily follows that in proviso to subsection 2 of section 23 the total income? of an owner' would include income of his minor child
releasable in his hands under section 64 of the Act. In this view, question No. 1 must be answered in affirmative.
(8) So far as the second question is concerned, it does not really arise out of the order ofthe Tribunal. The Tribunal has nowhere stated that 'total
income and 'Gross total income' are interchangeable. The Tribunal has passed into service section 80B(5), as it stood before amendment by
Taxation laws (Amendment) Act, 1970, in order to support its contention that the total income as contemplated by section 2 (45) would include
income of minor child assessable in the hands of an assessee under section 64 of the Act. Section 80B (5) provided as under :
Gross total income' ""the total income computed in accordance with the provisions of this Act before making any deduction under this Chapter or
under sec. 2800 and without applying the provisions of .section 64.
(9). The tribunal has argued that where the Legislature wants to exclude income under section 64. it has expressly said so. The argument cannot be
reasonably interpreted to mean 'total income' chargeable under section 5 is equivalent to the amount of 'gross total income' as defined in section
80B (5) If at all the Tribunal mean that, we must say at once that it has fallen into error. For this we rely upon the discussion hereinbefore
appearing which clearly shows that the 'total income' and 'gross total income' are not synonymous. They are mutually exclusive. The concept of
each is different from the other. In this view, the total income chargeable under section 5 is not the same as 'gross total income' defined in Section
80B (5) of the Act. Therefore, question No 2 is liable to be answered in the negative.
(10) The result is that question No. 1 is answered in the affirmative and the question No. 2 in the negative. In view of the divided success, the
parties are left to bear their own costs. Counsel fee is assessed at Rs. 150/
