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TMI Blog2010 (7) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... law in treating the assessee's income from business instead of income from house property even though the assessee had himself shown by "Rent Received" in receipts side of the Profit and Loss account fded with the return of income." 3.1 The only issue for consideration relates to deleting the addition of Rs. 7,23,980/- on the ground that the same was assessable as business income. The facts of the case stated in brief are that the original assessment was made under section 143(3) of the I. T. Act, 1961 wherein income from house property was treated as business income. The additions made by the assessing officer were confirmed by Ld CIT(A) except allowing the relief of Rs.54,208/-. On further appeal before the ITAT, the matter was restored to the file of the Ld. CIT (A) for deciding the issue afresh. Meanwhile, the assessing officer re-opened the assessment under section 147 read with provisions of section 148(2) of the Act on the ground that the assessee had wrongly shown rental income of Rs. 17,41,200/- from house property as business income. Before assessing officer it was submitted that the assessee had taken property on lease from M/s. Neelam Cable Manufacturing Company, a sis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property or any part thereof and had taken the property on lease and after developing the property, let out the portion as shops / stalls etc., the rental income was assessable under the head business. The facts of the case being identical to the case laws relied upon by the assessee; the ld. CIT (A) came to the conclusion that the rental income was assessable as business income as the assessee was not the owner of the property. He also noted that the assessing officer while passing the order under section 143(3)/147, had allowed the expenses of salary, lease charges, building repairs, car running expenses and other expenses as the expenditure pertaining to its business. The ld. CIT (A) also observed that the premises were located in industrial area and it was an industrial plot for all purposes, which could not be used as residential building under the statute of relevant governing bodies. Therefore, the income from lease charges was assessable under the head business and not under the head income from house property. The ld. CIT (A) accordingly held that the rental income was assessable under the head business and not under the head income from house property. 4. Before us the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety, company or other association of persons to whom a building or part thereof is allotted or leased under a house building scheme of the society, company or association, as the case may be, shall be deemed to be the owner of that building or part thereof; (iiia) a person who is allowed to take or retain possession of any building or part thereof in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882), shall be deemed to be the owner of that building or part thereof; (iiib) a person who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) in or with respect to any building or part thereof, by virtue of any such transaction as is referred to in clause (f) of section 269VA, shall be deemed to be the owner of that building or part thereof;" 5.2 Obviously the assessee's case does not fall in definition of owner of house property as specified in clauses (i) to (iiia) of section 27 of the Act, 1961. The assessee' s case would fall under clause (iiib) of section 27 of the Act, if the lease of the property falls under clause (f) of Section 269UA. Und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the nature referred to in section 53A of the Transfer of Property Act, 1882 will be treated as transfer and the transferee assessee would become owner of house property for the purposes of sections 22 to 26 of the Act. 5.5 The Hon'ble Supreme Court in the case of CIT v. Poddar Cement Pvt. Ltd. & Others 226 ITR 625 (SC) had an occasion to examine the meaning of the word "owner". It has been observed that section 9(i) of the Indian Income-tax Act, 1922 .was substantially the same as section 22 of the Income-tax Act, 1961. The while of section 9 of the old Act has been split up and redrafted into several separate sections, namely, sections 22 to 27 under the head new Act. In Jodhamal Kuthiala v. CIT (1971) 82 ITR 570 (SC), it was held that section 9 of the 1922 Act brings to tax the income from property and not the interest of a person in the property. A property cannot be owned by two persons, each one having Independent and exclusive right over it. Hence, for the purpose of section 9 of the 1922 Act, the owner must be "that person who can exercise the right of the owner, not on behalf of the owner, but in his own right." The above observations of the Hon'ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owner of the property, the assessee had developed the property and has leased out the same to other persons. Therefore, the assessee had got a right to receive the lease rentals from the tenants. Accordingly, for the purposes of section 22 the assessee is the owner of the property and the income therefrom is chargeable under the head income from house property. Further the decision in the case of S.G. Mercantile Corpn. (supra) was rendered in 1972 much earlier to the amendment brought into statute by Finance Act, 1987 with effect from 1/04/1988 according to which clause (iii) was substituted by present clauses (iii) (iiia) & (iiib) which enlarges the scope of the word owner for the purposes of sections 22 to 26 of the Act. Hon'ble Supreme Court in the case of Poddar Cement Pvt. Ltd. (supra) also held that the amendment introduced by the Finance Bill, 1987 was declaratory/clarificatory in nature so far as it related to sections 27(iii), (iiia) and (iiib). Consequently, these provisions are retrospective in operation. This being the position of law the present appeal is squarely covered by the ratio of decision of Hon'ble Supreme Court in the case of CIT v. Poddar Cement Pvt. Ltd. & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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