Income from Wife’s Investment Not taxable at hands of Husband: ITAT deletes Rs. 12 lakh protective addition

The ITAT Mumbai bench ruled in favor of a taxpayer, deleting a protective addition of Rs. 12 lakh attributed to income from his wife’s investments. The case arose from the income tax authority's assumption that investments made in the wife’s name were funded by the husband and, therefore, taxable in his hands. The taxpayer contested this, arguing that his wife had an independent source of income and had legally invested her funds. The ITAT agreed, observing no evidence that supported the tax department’s claim. The ruling underscores the principle of individual taxation, affirming that income from a spouse’s independent investments cannot arbitrarily be taxed in the hands of the other spouse. This decision serves as a precedent for upholding tax laws fairly when dealing with marital financial arrangements.