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Interpretation of Section 9 of the Income Tax Act regarding the assessment of net annual value of house properties under the management of a receiver in the case of a Hindu undivided family. Analysis: The judgment by the Patna High Court, delivered by Justice Meredith, pertains to a reference made by the Income-tax Tribunal regarding the inclusion of the net annual value of house properties managed by a receiver in the assessment of a Hindu undivided family for the year 1943-44. The case involved a mortgage executed by the assessee to secure a loan, leading to the appointment of a receiver by the High Court during pending litigation. The receiver realized income from various sources, including house property, which was assessed by the Income-tax Officer under Section 9 of the Income Tax Act. The Tribunal, supported by the Appellate Assistant Commissioner, held that the mortgagor should be considered the owner for tax assessment purposes, not the mortgagee or the receiver. The Tribunal's decision was based on the legal principle that even in the case of an English mortgage, the legal estate remains with the mortgagor, as established by the Privy Council in a previous case. Section 9(1) of the Income Tax Act specifies that tax is payable by the owner based on the annual value of the property, with allowances for certain charges. The judgment clarified that the mortgagor, not the mortgagee or the receiver, is deemed the owner for tax assessment under Section 9. The argument that the receiver should be considered the owner was dismissed, emphasizing that a receiver is merely an officer of the Court managing the property temporarily. The judgment highlighted that the receiver's possession is on behalf of the Court, and the receiver does not hold ownership rights over the property. The judgment referenced legal precedents to support the distinction between ownership for tax purposes and actual possession or management of the property. It was concluded that the mortgagor retains ownership rights even during a mortgage, aligning with the legislative intent of Section 9 to consider the mortgagor as the liable owner for tax assessment. The judgment affirmed the Tribunal's view that the mortgagor is the owner for tax purposes, entitling the assessee to relevant allowances under Section 9(1)(iv). In conclusion, the Patna High Court upheld the Tribunal's decision, ruling that the mortgagor is the owner for tax assessment purposes, not the mortgagee or the receiver. The judgment clarified the legal interpretation of ownership under Section 9 of the Income Tax Act and awarded costs to the Commissioner of Income-tax. Chief Justice Agarwala concurred with the decision, and the reference was answered accordingly.
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