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TMI Blog1993 (2) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the buyers after receiving the sale consideration from them. However, the sale deeds had not been executed and got registered in favour of those buyers. During the course of assessment proceedings for assessment year 1982-83, the ITO elaborately examined the issue as to whether the appellant-firm is liable to tax on Annual Letting Value of the property under section 22 of the Act, regardless of the fact that the various shops/flats had been sold to the various buyers and possession was also handed over to them after receiving the sale consideration, in view of the fact that the sale deeds were not executed and registered in their favour. After examining the relevant provisions of IT Act, Transfer of Property Act, Indian Registration A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 147(a) was invalid. The next ground, which is common for all the appeals, is that the CIT (Appeals) has erred in holding that income from properties which were contracted for sale but no documents were executed or registered was not assessable in the hands of the assessee under section 22 of the Act in view of the fact that legal ownership of the said property continued with the assessee and for which the assessee was assessable under section 22 of the Act. 4. We will first deal with the ground relating to validity of the proceedings initiated under section 147(a) for assessment years 1977-78 to 1979-80. The learned D. R. relied on the reasons recorded in the assessment order and submitted that the CIT (Appeals) ought to have held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the buyers. The assessee continued to be the legal owner of such flats and shops. The provisions of section 22 provides for levy of tax on notional ALV in respect of properties owned by the assessee regardless of the fact whether the income in fact is received by the assessee or whether the assessee in fact possesses those properties. It is also well settled law that the legal ownership vests with the assessee till a sale deed is duly executed and registered in favour of the buyers, which have admittedly not been executed and registered in the present case. The ITO has given elaborate reasons and has also cited several decisions which clearly support the conclusions derived by him. The CIT (Appeals) ought to have confirmed the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such business it constructed a multi-storeyed building and sold the flats and shops to various buyers. It is an admitted fact that on payment of sale consideration, possession of the shops/flats was transferred to the buyers. The buyers thereafter enjoyed exclusive right of possession, enjoyment and disposal of the flats/shops. He had the right to control, handle and dispose of the same. This right may not be perfect in the sense that there had been no change of ownership from the builder to the buyer by a registered deed of conveyance, but his right as owner was in no way encumbered. The shop/flat was not charged with any right towards a third person. The term " ownership " used in section 22 of the Act is not merely a word of technical, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the buyers of the flats have let out these portions and are deriving rental income in respect of which they must have been subjected to tax. Some buyers occupying the respective shop/flat have their own business/residence. There is no justification in levying tax in the hands of the appellant-firm. Such a controversy has also been resolved by the Finance Act, 1987 w.e.f. 1-4-1988 by suitably substituting clauses (iii), (iiia) and (iiib) in section 27 which now expressly provides that ownership of the house property will be broadly determined on an enjoyment basis and not on actual legal ownership basis. The view taken by the CIT (Appeals) is, therefore, confirmed in relation to this ground also. 8. In the result, all the appeals are di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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