TMI Blog2003 (1) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the return filed on 29-8-1995 should be treated as one filed in response to notice under section 147. 3. The assessee derives income from sub-letting and also interest. For the year under consideration, assessee received rent of Rs. 2,76,750 from the buildings leased out to Canfin Homes and Oriental Insurance Company. This building was taken on lease by the assessee from Smt. Leela Amma and Sri M. Baiju. After deducting certain expenses from the lease rent, the assessee offered for assessment a sum of Rs. 1,01,496 under the head 'business income'. The contention of the assessee before the Assessing Officer was that since he was not the owner of the building, the lease rent received is assessable as income from business. The Assessing Officer did not accept the above contention of the assessee holding that the assessee is deemed owner as per the provisions of section 27(iii)(b) read with Explanation to section 269(UA)(f). He treated the lease rent received by the assessee as income from house property. The assessee appealed to the first appellate authority. 4. The first appellate authority accepted the submission of the assessee that the term of lease had not exceeded 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was always accepted as business income. The assessee's representative distinguished the decisions (1) S.G. Mercantile Corpn. (P.) Ltd. v. CIT [1972] 83 ITR 700 (SC) and (2) R.B. Jodha Mal Kuthiala's case and placed reliance on the decision of the jurisdictional High Court in Palace Fund (Individuals') case. The fact that by two successive agreements, the property was in the possession of the assessee for more than 12 years is not disputed. The assessee's representative submitted that both the Assessing Officer and the Commissioner (Appeals) erred in treating the lease rent received by the assessee as income from house property. Assessee was taking buildings on lease and was sub-letting them. Therefore, the income received from such an activity is assessee's business income. He further submitted that it was by Finance Act, 1987 that the meaning of the expression "ownership" was extended for the purpose of adding income under the head "income from property". The expression "ownership" meaning legal ownership had the effect of excluding cases where an assessee possessed all rights to an immovable property except the husk of the title. Relying upon a portion of the extract from Circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Amendment) Act 1972 with effect from 15-11-72. It ceased to be in operation in respect of the transfer of immovable property made after 30-9-1986. This Chapter itself was introduced to avoid tax evasion. The heading reads: "Acquisition of immovable properties in certain cases of transfer to counteract evasion of tax". Section 269A is the defining section. First of all the heading itself indicates that the acquisition of immovable properties are in cases where there was a transfer between the parties or distant relatives showing lesser value of the property in the document so as to avoid tax. Hence, Chapter XX-A is applicable only in the case of Government and not to individuals. Chapter XX-C consisting of sections 269UA to section 269UD was inserted with effect from 1-10-1986 vide Notification No. S.O. 480(E) dated 7-8-1986. The heading of this Chapter reads: "Purchase by Central Government of immovable properties in certain cases of transfer." The above heading indicates that this Chapter was introduced so as to counter the tax evasion. Section 269UA reads: "The provisions of Chapter shall come into force on such date as the Central Government may, by notification on the official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such agreement for transfer, the value of the consideration payable after such date shall be deemed to be the discounted value of such consideration, as on the date of such agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf." So, the whole thrust of Chapter XXC which is applicable in certain cases is to prevent the evasion of tax. Clause (d)(f) of section 269UA(b)(2) gives the extended meaning of 'transfer'. Sub-clause (f) above reads as under: "(f) "transfer", - (i) in relation to any immovable property referred to in sub-clause (i) of clause (d), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882; Explanation.-For the purposes of this sub-clause, a lease which provides for extension of the term thereof by a further term or terms shall be deemed to be a lease for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will not constitute the change of ownership. Further, coming back again to the section (section 269U), it is clear that the provisions of this Chapter (Chapter XXC) shall come into force on such date as the Central Government may, by notification in the official gazette appoint, and different dates may be appointed for different areas. 10. It means, the provisions of Chapter XXC have no application throughout the country. The Government has first to decide the date and it has to be published by notification in the official gazette, and the government is empowered to give different dates to make it applicable for different areas at different times. It is seen that this provisions has not been made applicable to Calicut. It is applicable to Greater Bombay, Union Territory of Delhi (as it was then), Calcutta, Madras, Bangalore, Ahmedabad, City of Poona, Chandigarh, Jaipur, Trivandrum, Cochin, Patna, Bhopal, Indore, Cuttack, Hyderabad, Coimbatore, Madurai, Surat, Ghaziabad and Noida. 11. Once again coming to section 27(iiib), it reads as under: "S. 27: For the purposes of sections 22 to 26 - (iiib) a person who acquires any rights (excluding any rights by way of a lease from m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s putting the other person in possession of the property as the first step of transferring the properly in consequence of part performance, as referred to in section 53A of the Transfer of Property Act 1882. The above Circular concludes "All these types of transactions have the effect of transferring the house property in fact, though not in law. With the extended definition of the expression 'ownership', transactions covered by section 269UA of the Income tax Act, 1961 (including transfer of property by power of attorney) shall be considered as having the effect of transfer of title. The Finance Act, 1987, by substitution of clauses (iii), (iiia) and (iiib) in section 27, covers all the transactions referred to above for the purpose of determining the ownership of the property for assessing income under the head "income from house property". This means, this Circular applies to the transactions mentioned above and not to any other transaction. 14. In the instant case of the assessee, it is not a transfer or transaction as referred to above, and as such, the extended meaning of 'ownership' cannot be applied. In the light of the above, I am of the view that the orders of the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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