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Inclusion of rental income from a purportedly sold property in the total income of the assessee company. Analysis: The appeals before the Appellate Tribunal ITAT Nagpur involved a common issue regarding the inclusion of rental income from a house property purportedly sold by the assessee company to a firm. The agreement for the sale of the superstructure on a leased plot was not duly registered, leading the Income Tax Officer (ITO) to conclude that the transfer of ownership did not occur. The ITO also rejected the plea for allowing interest on the sale consideration. The assessee's argument that the firm was the legal owner of the superstructure was dismissed by the revenue authorities, prompting the appeals. The learned counsel for the assessee relied on a case law to argue that possession and usufruct had been transferred to the purchaser firm, thus the rental income should not be included in the assessee's total income. In contrast, the Departmental Representative contended that since the sale deed was not registered, the ownership remained with the assessee company, citing relevant legal precedents. The Tribunal carefully considered the arguments and legal precedents presented. It noted that the sale deed, being for an immovable property of significant value, was compulsorily registerable under the Registration Act. As the deed was not registered, the transfer of ownership did not occur, and the assessee company retained ownership of the building. The Tribunal found that the decision cited by the assessee was not applicable as it did not involve non-registration of the sale deed. The doctrine of part performance under the Transfer of Property Act was also deemed irrelevant in this case. The Tribunal emphasized that under income tax law, beneficial ownership is not recognized, and only legal ownership matters. The newly introduced provision of the IT Act was deemed inapplicable to the appeals' assessment years. The Tribunal concluded that there was no merit in the appeals and dismissed them. In summary, the Tribunal upheld the inclusion of rental income in the assessee company's total income due to the non-registration of the sale deed, which prevented the transfer of ownership to the purchaser firm. The legal principles of ownership and registration were crucial in determining the tax treatment of the rental income, leading to the dismissal of the appeals.
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