UNNEERIKUTTY M A Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of an assessee to income-tax, the Income-tax Appellate Tribunal (in short, "the Tribunal") has referred the following three questions of law for the decision of this court :

(2.) THE respondent is the Revenue. We are concerned with the assessment years 1976-77 to 1979-80. In April 1970, the assessee and his wife purchased a plot of land on which there was an old building. THE old building was pulled down. THEreafter, a hotel building was constructed thereon. A company was floated by name "Kalpaka Tourist Home (Pvt.) Ltd." which was incorported on March 13, 1972. THE construction of the hotel building was started in 1970 and completed in 1976. THE assessee and his wife were the only two shareholders in the limited company. THE company commenced its business on January 18, 1974. THE assessee as well as his wife invested amounts in the construction of the building. THE amount invested by them was satisfied by issuing shares of the company to them. During the relevant assessment years, the Income-tax Officer included the income from property of Kalpaka Tourist Home (Pvt.) Ltd. in the hands of the assessee by estimating its annual value. It was so done taking the view that the land on which the building stood was not transferred to the company by a registered deed. THE plea that the company was the owner of the building was negatived. THE annual letting value was estimated. In appeals, the Commissioner of Income-tax (Appeals) estimated the annual letting value of the property at Rs. 75,000 and held that only five-sixth income could be assessed in the hands of the assessee. In the second appeal filed by the assessee before the Tribunal, it was held that the company cannot be considered to be the owner because there is no instrument of sale deed in favour of the company. THE Tribunal also held that out of seven-eighth portion of the property income, the assessee should bear five-sixth and his wife should bear one-sixth. It is thereafter, at the instance of the assessee that the above questions of law have been referred for the decision of this court.

(3.) THE income-tax references are answered accordingly.