- (1.) THE Income -tax Appellate Tribunal, Delhi has referred the following two questions of law under Section 256(2) of the Income -tax Act, 1961 (hereinafter referred to as "the Act"): 1. Whether on the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was legally justified in holding that income from the property 'Aggarwal Market' is to be assessed in the hands of each of the co -owners separately and not in the hands of AOP ?
(2.) WHETHER on the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was legally justified in holding that the provisions of Section 26 of the Income -tax Act are applicable in this case ? 2. Briefly stated the facts giving rise to the present reference are as follows: The reference relates to the assessment year 1990 -91.
(3.) THE Respondent -Assessee filed her return of income declaring income, including rental income from property known as Aggarwal Market. Eight persons, including the Respondent -Assessee, had purchased 27805 sq. ft. of land near Mahavir Chowk, Muzaffarnagar from M/s. Anand Swaroop and Sons during the financial year relevant to the assessment year 1993 -94 (sic). The purchase by each of the 8 persons was effected by separate registered deeds. The area of land purchased and investment made therein was also different in respect of 8 persons. All the 8 persons applied separately to the prescribed authority for approval of construction of shops and separate maps were submitted. However, all the 8 persons started construction jointly and a consolidated map was prepared for the whole area. They decided to share 1/8th of the rental income derived from the income of Aggarwal Market. The assessing authority held that the income from property known as Aggarwal Market is assessable as income of the association of persons, i.e., M/s. Aggarwal Market. The Tribunal had held that the value of the commercial property was not to be assessed in the hands of the Assessee as an AOP but in the hands of the co -owners. In view of the order of the Tribunal, the Assessing Officer made an assessment in the cases of the present Respondents on protective basis instead of substantive basis.;