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Issues Involved:
1. Ownership and Tax Liability under Section 9 of the Indian Income-tax Act, 1922, and Section 22 of the Income-tax Act, 1961. 2. Interpretation of "Owner" in the context of Income-tax provisions. 3. Applicability of Section 53A of the Transfer of Property Act. 4. Effect of possession and receipt of income on ownership status. Detailed Analysis: 1. Ownership and Tax Liability under Section 9 and Section 22: The primary issue was whether the assessee society was liable to be assessed on the income from the property under the provisions of section 9 of the Indian Income-tax Act, 1922, for the assessment year 1961-62 and under section 22 of the Income-tax Act, 1961, for the assessment year 1962-63. The Income-tax Officer held the assessee liable as the owner of the property. However, the Appellate Assistant Commissioner disagreed, asserting that since the property was in possession of the purchaser from January 1960, the income should not be assessed in the hands of the assessee. The Tribunal, however, concluded that the real owner should be taxed, considering the trustees as the de facto owners due to their possession and receipt of rents. 2. Interpretation of "Owner": The court examined the interpretation of "owner" under the relevant tax provisions. Mr. Joshi, representing the revenue, argued that legal ownership determined tax liability, regardless of possession or receipt of income. He cited the Division Bench decision in D. M. Vakil v. Commissioner of Income-tax, which supported the view that legal ownership, not beneficial ownership, dictates tax liability. Conversely, Mr. Kolah, representing the assessee, emphasized that the right to receive income should determine ownership for tax purposes, supported by the earlier decision in Commissioner of Income-tax v. Abubaker Abdul Rehman, which was later disapproved by the Privy Council. 3. Applicability of Section 53A of the Transfer of Property Act: Mr. Kolah argued that Section 53A of the Transfer of Property Act, which allows a transferee in possession to protect their rights despite the absence of a registered deed, should apply. However, the court clarified that Section 53A only provides a defense against the transferor and does not confer title to the transferee. The court referenced the Supreme Court decision in Ram Gopal Reddy v. Addl. Custodian, Evacuee Property, which held that Section 53A does not create ownership but merely protects possession. 4. Effect of Possession and Receipt of Income on Ownership Status: The court considered whether possession and receipt of income by the trustees altered ownership status. The court reiterated that under Section 54 of the Transfer of Property Act, a sale of immovable property valued at Rs. 100 or more requires a registered instrument to transfer ownership. Mere possession and receipt of income do not constitute ownership. The court cited several cases, including Commissioner of Income-tax v. Ganga Properties Ltd., which held that legal ownership, not beneficial ownership, determines tax liability. Conclusion: The court concluded that the assessee society remained the legal owner of the property until the execution of the registered sale deed on February 12, 1962. Therefore, the assessee was liable to be taxed on the income from the property for the assessment years 1961-62 and 1962-63. The court answered the question in the affirmative, upholding the revenue's position and requiring the assessee to pay the costs of the revenue.
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