SUSHIL ANSAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) Income-tax is only one tax though it is levied on the sum total of one's income classified as chargeable under various heads which are set out in Section 14 of the Act. The computation of the income under each of these heads carries its own difficulties but, of all the heads of income referred to in Section 14, the computation of the in- come under the head 'income from house property' is perhaps the simplest. There are two important features of the assessment of this kind of income. The first is that, under this head, the annual value of property consisting of any buildings or land appurtenant thereto, of which the assessee is the owner, is chargeable to income tax. Thus, the tax under this section is in respect of the ownership of property and not the occupation, possession or other kind of rights over house property. The second point is that the annual value of any property for the purpose of this computation was prescribed under Section 23 (at the point of time with which we are concerned) to be the same for which the property might reasonably be expected to let from year to year. In other words, though the tax under this head is a tax on income, it is not a tax upon the rents actually derived by an owner from the property but is charged on an artificial or notional income which one could derive from such property even where the owner in fact may derive no income whatever therefrom. This proposition has been laid down in a large number of cases and it will be sufficient to refer to the decisions of this Court in

(2.) The twin concept under Sections 22 and 23 which envisage a tax on the owner of the property but at the same time disassociates the tax from the actual derivation or enjoyment of the income from the property has led to the difficulty that comes up for consideration in the present case.

(3.) A person may become the owner of a building in various ways. He may have inherited the building and the land on which it stands from his parents or some other persons. He may have purchased the land and then constructed the building thereon. He may have taken the land on lease and constructed the building thereon. Or, lastly, he may have acquired the land as well as the building from somebody else. In the fourth set of circumstances outlined above, there is a transfer of ownership from one person to another in respect of the building. This transfer may be by way of sale, gift or exchange and, if so, under the Transfer of Property Act, 1882 (T. P. Act, for short) the transfer of ownership can be effected only by means of a registered instrument (vide : Sections 54, 118 10. and 123 of the T. P. Act). However, in recent times, various other devices are sought to be employed for transferring one's ownership in property. This is due to various reasons. In the first place, the drawing up of a sale deed and its registration involve considerable expenses by way of stamp duties and registration charges. Secondly, in some places there are restrictions on the transfer of property and parties desire to circumvent these restrictions. Thirdly, due to shortage of space in big cities, house property takes the shape of flats, a large number of which constitute one building, the ownership of which is more conveniently held through membership of companies or cooperative societies. The difficulty now before us arises where a person who is the owner of a building claims that he has transferred a house property to another person by one of these means without the execution and registration of an instrument of transfer. The question is as to which person is to be assessed on the income from the property in such cases, the transferor or the transferee or both ?