TMI Blog1985 (4) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,300 from M/s. Khan Mohd. Katha Trading Co. on December 18, 1963, April 8, 1964, November 10, 1964, and February 18, 1965. These sums were debited to a separate account in the name of the assessee in the books of the said firm. A sum of Rs. 59,760 was spent on the construction of Park View Hotel, which was started in October, 1967, and was completed in September, 1968. The entries in the books of account of the firm were reversed in the assessment year 1968-69 by crediting the account of the assessee by Rs. 53,200 and debiting the account of the assessee and alleged two owners, viz., Allah Bux and Abid Ali, by Rs. 17,733 on July 9, 1968. The copies of the building account of the firm's books, assessee's account, Allah Bux and Abid Ali's accounts were produced. The question that arose before the Income-tax Officer, " A " Ward, Udaipur (ITO), was whether the assessee, Saiffuddin, was the owner of the property (Park View Hotel) and the income therefrom should be assessed in his hands. The ITO came to the conclusion that the property belonged to the assessee and the income therefrom should be taxed in the hands of the assessee in respect of the assessment years 1971-72 and 1972-73. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention was to acquire the property by these three persons jointly ....... I feel that this has been deliberately not done because the so-called claim of joint ownership appears to be designed only for taxation purposes and not for civil law purposes for which the appellant wants to remain the absolute owner. Thus, applying the above tests, I would hold that the appellant was the sole legal owner of the property constructed on plot No. 9/37, opposite Town Hall, Udaipur, and in which, later on, a hotel under the name of Park View Hotel is being run and, therefore, the entire income therefrom is to be included in his total income in view of the provisions of s. 22 of the Act of 1961, notwithstanding the fact that a part of the cost of construction of property was later on reimbursed by his two brothers, S/Shri Allah Bux and Abid Ali. I would, therefore, confirm the finding of the ITO on this behalf and reject the contention of the appellant. " On further appeal, while dismissing the appeal against the order of the AAC, the Tribunal came to the following findings : (1) that the plot in question was purchased by Shri Saiffuddin from the U.I.T. and the sales certificate was iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id title to them. The sheet-anchor of the argument of the learned counsel for the assessee is that for the purpose of s. 22 of the Act, the assessee was the owner only of 1/3rd share of Park View Hotel and that it was wrongly found by the Tribunal that the assessee is the sole owner of Park View Hotel as not only he purchased the plot on which Park View Hotel was constructed but he spent the money on its construction. It is correct that no sale deed as required by s. 54 of the Transfer of Property Act was executed by the assessee in favour of his two brothers and further that there was no agreement between his two brothers stipulating that each one of them has 1/3rd share in the building (house property known as Park View Hotel). While disagreeing with the Tribunal, we have already held that the expenditure on the construction of Park View Hotel was spent by the firm and, thereafter, the assessee as well as his two brothers agreed to bear 1/3rd share thereof. From the foregoing discussion, it is clear that the plot was the property of the assessee and thus, he is the owner. So far as the construction on the plot is concerned, viz., super structure, it belongs to the assessee Saiffu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the building stands. While considering the question regarding the ownership, it was observed as under (p. 215): " The rule in India which is different from that in England, is that person who builds a superstructure upon the land of another man remains the owner of the superstructure and can at the end of his term remove that superstructure from the land, whereas in England a person who erects a building on the land of another cannot do so as the building at the end of the lease becomes the property of the lessor." In CIT v. Fazalbhoy Investment Co. (P.) Ltd. [1977] 109 ITR 802 (Bom), the assessee agreed to lease out a piece of its land to build flats on behalf of flat owners with money advanced by flat owners. The flat owners occupied flats. The lessee gave up the land to the assessee under unregistered consent decree. A dispute between the assessee and the flat owners arose. The flat owners executed the lease deed to the assessee by way of compromise. The question arose whether the assessee was the owner of the flats and liable to tax under s. 9(1) of the old Act. While repelling the contentions raised on behalf of the Revenue that the assessee is the owner of the flats stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The focus of the section is on the receipt of income from the house property. If in a case, it is found as a fact that the assessee is in occupation of the building as owner for all intents and purposes, except the sale deed in his favour, even then, he is liable to income-tax under s. 22 of the Act. While respectfully following Madras Cricket Club's case [1934] 2 ITR 209 (Mad), Fazalbhoy Investment Co.'s case [1977] 109 ITR 802 (Bom) and Kala Rani's case [1981] 130 ITR 321 (P H), we, therefore, hold that so far as the construction on the plot which was purchased by the assessee is concerned, the expenses of which were borne by the assessee and his brothers, Allah Bux and Abid Ali, in equal proportion, the assessee and his two brothers are joint owners. It may be stated that s. 53A, which has been referred to on behalf of the assessee is not applicable, for, it cannot be availed of by the assessee for establishing his title. It is only a weapon of defence. Apart from that, s. 53A of the Transfer of Property Act is applicable if there is an agreement in writing signed by the assessee or on his behalf, from which the terms necessary to effectuate the transfer can be ascertained ..... X X X X Extracts X X X X X X X X Extracts X X X X
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