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TMI Blog1985 (3) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that property income till date of registration was to be assessed in assessees hands and had even heard the assessee s objection therein as he had obviously contemplated enhancement. Assessee objected of jurisdiction to Commissioner to enhance an income by taking into consideration a new source of income. Meanwhile the matter was brought to the notice of administrative Commissioner. Who found than mot all flats which had been handed over to the purchasers were yet registered in their names, though the agreement for sale provided for registration on completion of the flats. He took the view that the notional income from these flats had to be assessed in assessee s hands as income from property. He issued notice under s. 263 of the Act for including such income in the assessee s hands. 3. Assessee objected to Commissioner s notice under s. 263 both on the question of jurisdiction and merits. The facts that the assessee had filed an appeal before the CIT (A) was set up as a bar to administrative Commission s jurisdiction though such appeal was still pending at the time of the proposed action. This argument on the question of jurisdiction was not accepted by him after cit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Land Building Society (Pvt.). Ltd. (1972) 83 ITR 794 (Bom), CIT vs. Zorstrian Building Society Ltd. (1976) 102 ITR 499 (Bom) and some other cases though rendered later. He claimed that the earlier Bombay view in the case of CIT vs. Modern Flats (P) Ltd. (1967) 65 ITR 67 (Bom), Punjab Haryana High Court in the case of Kalarani vs. CIT., (1981) 21 CTR (P H) 17 : (1981) 30 ITR 321 (P H) where liability was confirmed in the case of purchaser) and Madras High Court in the case of Smt. M. P. Gnanambal vs. CIT (1982) 136 ITR 103 (Mad) laid down the correct law and cited few other cases which may not be strictly relevant to the issue besides citing the Special Bench decision of the Tribunal in the ITO vs. R. K. Sawhney (1982) 2 ITD 207 (Del) (SB) which supported his contention that mere title cannot fasten liability, He contended that what is contemplated under s. 22 is the ownership of annual value (income) from the property unlike perhaps the concept of ownership of asset itself as under s. 32 for purpose of deprecations where Building, machinery, plant or furniture should be owned by the assessee Even the Allahabad High Court, for example has held in the case of Addl. CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw-taxation. He argued that the owner should also interpreted in the same popular sense. He also claimed that the authorities are not consistent in their view as the flat owners in possession have already been assessed on their income and that the present attempt amounts to double taxation. He contended that there is no consistency even in the same assessment as handing over possession is treated as sale for computation of income from sale itself as business income but not so for the purpose of computation of income form property. 6. The ld. Departmental Representative took us over the provisions of Transfer of Property Act, Registration Act and Stamp Act. He pointed out that a registered deed of conveyance alone can confer legal ownership even as held in the case CIT vs. Ganga properties Ltd. (1970) 77 ITR 637 (Cal) and CIT vs. Zorastrian Building Society Ltd. and the recent detailed decision of Madras High Court in M. A. Muthaiah Chettiar vs. CIT (1984) 148 ITR 532 (Mad) besides the decision of Andhra Pradesh High Court itself Mir Barket Ali Khna s case, s. 53A of Transfer of Property Act based upon doctrine of part-performance he contended merely served as a protection or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of handing over possession as the date of sale in its accounts year after year and such computation has been accepted for purposes of computation of business income subject to other adjustments warranted by law. These flats have also been registered sooner or later is regular sale deeds in a standard form. The fact that possession had already been handed over is mentioned in the final formal sale deed. The assessee has filed the dates on which registrations have been effected. There has been a gap between the date of handing over of possession and registration. Meanwhile each flat was assigned was assessed to Municipal number and the purchaser was assessed to Municipal tax in his own name, It is contended that delay in registration had been partly due to uncertainties to Urban land Ceiling Laws, the failure of the purchaser to come up with stamp charges and for registration and such other factors and was not due to any negligence on the part of the assessee. The dispute before us is whether the assessee is assessable on the "Notional income" for these flats for the period of gap between the dates of possession and conveyance. 8. The proposition that right or an interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, have to go into the larger question of ownership in the absolute sense. For the purpose of depreciation, the ownership of asset in question is a precondition and the issue may have to be considered in the stricter sense. Even there Allahabad High Court in the case of Agro Industries Corporation has preferred a more liberal view though Delhi High Court case of Hindustan Cold Storage Refrigeration had taken a stricter view. But this controversy, in our opinion need not detain us for long. For purposes of s. 22, we are concerned with computation of income and it stands to reason that ownership has to be understood in that context. It is not correct to say, as canvassed by the ld. counsel for the assessee that the words "of which the assessee is the owner" in s. 22 qualifies only the words "annual value" and not "property" when the composite phrase in section as a whole reads as under: "The annual value of property consisting of any building or lands appurtenant thereto of where the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perties and Investment Co. (P) Ltd. (1983) 34 CTR (Pat) 382 : (1983) 144 ITR 357 at 371 (Pat) while referring to s. 9 of 1922 Act analogous to s. 22 of IT Act, 1922 mentioned earlier that section seeks to bring to tax income of the property in the hands of the owner. Hence the focus of that section is on the receipt of income. The word owner has different meaning in different contexts. High Court then proceeded to cite various authorities like Stroud s Judicial Dictionary (referred by the Supreme Court as well, Pollock on Jurisprudence, Dias on Jurisprudence and Patons Text-book on Jurisprudence) for the following conclusion stated in Stroud s Judicial Dictionary as what 'Owner' means in (1983) 144 ITR 357 at 362 (Pat): "Owner applies to every person in possession or receipt either of the whole, or of any part, of the rents or profits of any land or tenement; or in the occupation of such land or tenant, other than as a tenant from year to year or for any less term or as tenement at will". High Court further proceeded to observed at the same page as under: "Thus, the juristic principle from the view point of each one is to determine the true connotation of the term "owner" wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of another, there is absolutely no warrant for such an attempt. No doubt there had been som conflict of views among the High Courts at their point. But since the Supreme Court has categorically laid down the ownership is with reference to income, and since it is assessee s claim that it had no right over the income as per agreement of sale and that the claim that it had not enjoyed any income is a matter of record. We should accept the assessee s claim. 10. Since revenue has sought to bank upon the decision of Andhra Pradesh High Court in Mir Barkat Ali Khan s case some discussion as to the decisions of the High Courts cannot be avoided. This decision as pointed out by the ld. counsel was rendered without noticing the Supreme Court decision. It is pointed out by the Patna High Court in the case of Addl. CIT vs. Sahay Properties Investment Co. (P) Ltd. (1983) 34 CTR (Pat) 382 : (1983) 144 ITR 357 (Pat) in similar circumstances that income is assessable under s. 22 in the hands of the person in possession of the property following the decision of Supreme Court in Jodhamal Kuthala s case and further pointed out that decision in Mir Barket Ali Khan s case cannot be correct i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for computing the income from the two sources, we do not think it is open to revenue to be inconsistent in taxing the same income in two hands even if two different persons are sought to be taxed under different heads of income. We are informed that in the case of most of the purchasers in possession assessments have been made and tax collected and such assessments by and large, became final wherever there is liability. On this sole ground that there cannot be double taxation of the same income, the order of the CIT under s. 263 cannot stand. We also found that revenue itself has taken a reasonable view in such circumstances. It was for example in Board s Circular No. 7 (XVII-D-I) of 1954 dt. 10th March, 1954 stated that individual member of a Co-operative Housing Society should be assessed on the income of their building/flats though the ownership in many cases may rest with the co-operative society. Later by another Circular in F. No. 8/2/69/IT (A-I) dt. 25th March, 1969 the Board tried to read the agreement itself as one resting the ownership in such members for the same result. A similar Circular was issued for wealth-tax purposes in letter No. F. No. 8/2/69-1 (A-T) dt. 25th Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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