V.K.KHANNA, J. - (1.) THIS reference relates to the assessment year 1969 -70. Smt. Kamlesh Gulati constructed a house at a cost of Rs. 1,40,000. There is no dispute now that Rs. 50,000 had been gifted to her by the assessee and another sum of Rs. 61,000 had been advanced by the assessee to her as a loan. The ITO did not accept the theory of giving of the loan of Rs. 61,000 to the assessee's wife and held that in view of the provisions of Section 64(iii) of the I.T. Act, the income from the house was liable to be assessed in the hands of the assessee. Accordingly, a sum of Rs. 3,500 was added to the assessee's income in the assessment year 1969 -70 on this score. It may be mentioned that the aforesaid amount was arrived at by applying the provisions of Section 23(2) of the I.T. Act, as it was held that the house was being used by the assessee for his own residence. On appeal by the assessee, the AAC, Lucknow, held that the ITO was justified in rejecting the claim of the assessee regarding the giving of the loan amounting to Rs. 61,000 to his wife. As the assessee had given only Rs. 1,11,000 out of the total cost of the house amounting to Rs. 1,40,000, the AAC held that only 4/5ths, income from the house could be assessed in the hands of the assessee.
(2.) THE matter was then taken up in appeal by the assessee before the Income -tax Appellate Tribunal. The Tribunal accepted the claim of the assessee regarding the giving of a loan of Rs 61,000 to his wife. The Tribunal held that the proportionate income from the house which was to be assessed in the hands of the assessee will have to be re -worked. It was also held that in case there was no other income of the wife, the income derived from the house would, in view of the provisions of Section 23(2) of the Act, be nil and that nothing could on that account be added to the assessee's income. The contention raised on behalf of the Commissioner of Income -tax that the provisions of Section 23(2) were not applicable was rejected. An application under Section 256(1) of the I.T. Act was thereafter filed by the Additional Commissioner of Income -tax, Lucknow, requiring the Tribunal to refer the following questions of law, which, in his opinion, arose out of the order of the Tribunal : ' (i) Whether, on the facts and in the circumstances of the case, was the Tribunal legally correct in admitting fresh grounds regarding the applicability of Section 23(2) for computing income in the hands of the assessee's wife ? (ii) Whether, on the facts and in the circumstances of the case, was the Tribunal legally correct in holding that for applying the provisions of Section 64(iii) the provisions of Section 23(2) of the I.T. Act, 1961, are applicable, and that if the lady had no other source of income then nothing could be added under Section 64(iii) of the I.T. Act, 1961 ? '
(3.) THE Tribunal has, however, referred only one question which is as follows : ' Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the provisions of Section 23(2) of the Income -tax Act were applicable while applying the provisions of Section 64(iii) and that if the wife of the assessee had no other source of income then nothing could be added under Section 64(iii) of the Income -tax Act, 1961, in the hands of the assessee ? ' ;