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Issues Involved:
1. Whether the Tribunal was justified in holding that as the assessee was not the legal owner, the income from the property was not assessable at all in its hands. 2. Whether the Tribunal was justified in not answering the alternative question as to whether the income was assessable under section 56 if it was not assessable under section 22 of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Legal Ownership and Assessment under Section 22 of the Income-tax Act, 1961: The Tribunal had held that the assessee, a private limited company, was not the legal owner of the property since no conveyance deed was executed and registered in its favor. Therefore, the income from the property was not assessable under section 22 of the Act. The Tribunal relied on the Calcutta High Court decision in CIT v. Ganga Properties Ltd. [1970] 77 ITR 637 (Cal) and concluded that under section 22, only the legal owner could be assessed. The Tribunal also considered sections 53A, 54, and 55 of the Transfer of Property Act and Supreme Court decisions in CIT v. Bhurangya Coal Co. [1958] 34 ITR 802 (SC) and R. B. Lodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (SC). The High Court examined the relevant clauses of the agreement between the Sahay family and the assessee-company. Clause 4 indicated that physical possession of the properties had passed to the assessee-company, allowing it to derive all income and benefits from the properties. Clause 5 obligated the vendors to execute and register conveyances as needed. The Court emphasized that despite the lack of a formal deed, the assessee had full control and enjoyment of the property, making it the practical owner. The Court referenced the concept of ownership from Roman law to modern jurisprudence, noting that ownership includes the power of enjoyment, possession, alienation, and exclusion of others. The Court argued that the assessee, having paid the full consideration and taken possession, had practical ownership and should be taxed under section 22. The Court found that the Tribunal misinterpreted the term "owner" and that the assessee should be deemed the owner for tax purposes. 2. Alternative Assessment under Section 56 of the Income-tax Act, 1961: The Tribunal did not address the alternative contention that the income should be assessed under section 56 as income from other sources if not under section 22. The High Court, having determined that the assessee was the practical owner under section 22, found it unnecessary to address this alternative question. The Court emphasized that the practical and logical interpretation of section 22 supports assessing the income in the hands of the assessee as the owner. Conclusion: The High Court concluded that the Tribunal erred in its interpretation of "owner" under section 22 of the Income-tax Act. The assessee, having full control and enjoyment of the property, should be deemed the owner for tax purposes. Therefore, the income from the property is assessable in its hands under section 22. The second question regarding assessment under section 56 was deemed unnecessary to address. The judgment was in favor of the Revenue, and no costs were ordered due to the differing opinions among various High Courts.
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