COMMISSIONER OF INCOME TAX Vs. BHAWANI KAVUR CHORDIA

JUDGEMENT

(1.) IT is not in dispute that the assessee, who was the owner of a building, had entered into an agreement under which he had parted with possession as also the right to receive the rents. The consideration for the sale of the building was to be paid in instalments and for the balance of instalments, interest was payable. The agreement is dated January 2, 1980. The consideration for the sale is Rs. 30 lakhs. Rs. 5 lakhs was payable before October 10, 1979, and the balance of Rs. 25 lakhs in five equal instalments starting from April 10, 1980. The vendee was to pay interest at the rate of 15 per cent, on the outstanding unpaid purchase price. Possession of the building was delivered to the vendee on March 31, 1979.

(2.) AFTER taking possession of the building, the vendee put up 5th floor on the building, received all the rentals from the tenants, and was paying interest on the unpaid purchase price to the vendor in the sum of Rs. 3.75 lakhs, during the assessment years 1980-81 and 1981-82 at the end of which the sale deed was yet to be registered.

(3.) SO far as the assessee's liability to be taxed on the rental income of the property is concerned, counsel for the assessee is right in pointing out that the assessee, though in the eye of law, is still the owner and would continue as such till the registered sale deed is executed, nevertheless for the purposes of Section 22 of the Income-tax Act, the vendor can no longer be regarded as the owner, after she had parted with possession of the property and had recognised the right of the vendee to receive alt the rentals. For the purposes of Section 22 of the Act, the vendee is required to be treated as owner as the vendee's right to receive the rental is not subject to any further consent of the vendor and the amounts are being received by the vendee in its own right.