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TMI Blog1996 (9) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the properties, of which the assessee is the legal owner, cannot be assessed in the assessee's hands under section 22 of the Act ? " The assessee is a registered firm dealing in real estate business. It constructs and sells flats on ownership basis. Its method of accounting its profit is by treating the date of handing over the possession of the flat to the owner as the date of sale irrespective of the date of registration of the sale deed. In respect of the assessment year 1979-80, previous to the accounting year 1978-79, the assessee returned an income of Rs. 1,33,166 on the basis of its books and the Income-tax Officer expressed the view that the profit should have been higher and estimated the same at Rs. 1,73,000 making a ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be in the affirmative and in favour of the assessee. In the case before the Supreme Court, the assessee was owner of certain property in Pakistan and the same was vested in the Custodian of Evacuee Property by virtue of section 6(1) of the Pakistan (Administration of Evacuee Property) Ordinance, 1949. The assessee claimed certain losses by way of payment of interest to a bank on the ground that it arose out of income from the property in respect of which the income was nil as the property has been taken over by the Custodian of Evacuee. The Income-tax Officer disallowed the claim as the property itself did not belong to the assessee and he cannot claim any such deduction. The Tribunal came to the conclusion that the assessee continued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that equitable considerations are irrelevant in interpreting tax laws. But, those laws, like all other laws, have to be interpreted reasonably and in consonance with justice. " Sri S. R. Ashok, learned standing counsel for the Revenue, contends that this court on a previous occasion in CIT v. Nawab Mir Barkat Ali Khan [1974] Tax LR 90 held the view that the ownership does not change until registered sale deed is executed by the vendor and, therefore, the expression " owner " in section 9 of the Indian Income-tax Act, 1922, or section 22 of the Income-tax Act, 1961, does not include beneficial or equitable owner. The decision of the Division Bench in Nawab Mir Barkat Ali Khan [1974] Tax LR 90 (AP) was rendered without noticing the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made an instrument of oppression. It must be in consonance with the principles underlying the Act. " Learned standing counsel for the Revenue has invited our attention to another decision of the Division Bench of this court in CIT v. Trustees of H. E. H. The Nizam's Miscellaneous Trust [1986] 160 ITR 253 in support of his contention that income of the present nature is liable to be taxed at the hands of the legal owner. In that case during the intervening period between the date of possession and the date of registration, the purchaser received the rents and showed them as income from other sources. The owner was already assessed to tax on the very same income. On the question of liability of the purchaser, the Division Bench held that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t having paid full consideration even where the instrument of transfer is not registered is entitled to receive the rent and he would be the owner for the purpose of municipal tax and liable to pay the municipal tax irrespective of his position in general law. Following the binding precedent in R. B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (SC) under the Income-tax Act, we answer the question in favour of the assessee and against the Revenue. We must mention in this context that the definition of " owner of house property " as contained in section 27 of the Act was amended by inserting clause (iiia) by the Finance Act of 1987 so as to make the position clear and explicit. The amended provision reads as under : " (iiia) A person who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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