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Issues:
1. Assessment of annual value of specific properties in the hands of the assessee trustees under section 9 of the Act. 2. Determination of whether rent receivable by the Custodian of Evacuee Property constitutes a charge under section 9(1)(iv) or an effective alienation at the source. Analysis: The judgment pertains to the assessment of the assessee, a corporation created by a statute, as trustees of a trust. The primary issue revolves around the assessment of the annual value of specific properties, namely Flats Nos. 7 and 8 of 'Currimbhoy Manor' and 'Poona Bungalow No. 20,' in the hands of the assessee trustees under section 9 of the Act. The properties in question were initially allowed to be occupied rent-free by the incumbent of the Baronetcy office. However, following the declaration of the incumbent as an evacuee, the Custodian of Evacuee Property took control of the properties, leading to a dispute regarding the ownership and assessment of income derived from these properties. The High Court analyzed the legal ownership of the properties vested in the trustees under Act IV of 1913. It emphasized that the liability to assess income under section 9 is based on ownership, irrespective of the owner's ability to derive income from the property. The court referenced a previous ruling to establish that income from property is an artificially defined income linked to ownership. Despite the Custodian's control over the properties post-evacuation, the trustees remained the legal owners, and the income was assessable in their hands. The court rejected the argument that the Custodian's power to derive income from the properties altered the ownership status for assessment purposes. The second issue addressed whether the rent received by the Custodian could be considered a charge under section 9(1)(iv) or an alienation at the source. The court dismissed the contention that the rent constituted a charge, as per the Act's provisions. It clarified that the income assessed under section 9 is based on ownership and not actual income received. Therefore, the source of income and its recipient are irrelevant for assessment purposes. The court concluded that the income was not effectively alienated at the source due to the Custodian's involvement, affirming that the liability remained with the trustees as owners. In conclusion, the High Court ruled in favor of the department, upholding the assessment of income from the properties in the hands of the trustees. The judgment clarified the legal principles governing the assessment of property income based on ownership, disregarding the actual receipt of income. The court directed the assessee to bear the costs of the department, concluding the judgment.
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