The main legal point established in the judgment is the interpretation of 'owner' in the context of Section 22 of the Income Tax Act, emphasizing that 'owner' is a person entitled to receive income from the property in his own right.

G.C. Bharuka, J.—These appeals have been preferred by the Department under Section 260A of the Income Tax Act, 1961 (in short "the Act"). The substantial question of law arising out of the Tribunal's order is--whether the income derived by the assessee from letting out of the house property should be assessed under the head "Income from house property" under Section 22 or "Income from business" under Section 28 of the Act.

2. The relevant facts He in a narrow compass. The assessee is a private limited company. One of the directors of the company, Sri B.R. Kapanipathy, had taken certain extent of lands situate at Bangalore on a long-term lease of 36 years under a registered lease-deed dated December 20, 1972, He executed a registered deed of transfer in favour of the assesses-company transferring his leasehold rights. Subsequently, the assesses-company built a commercial complex on the said land and allotted the same to various parties and earned income therefrom.

3. For the year 1985-86, the assessee filed its return of income on October 29, 1985, showing loss of Rs.1,28,652. The assessee filed the return for the subsequent assessment year 1986-87 on October 24, 1986, again showing a loss of Rs.75,882. The Assessing Officer completed the assessments computing the loss at Rs.1,25,600 and Rs.74,857, respectively.

4. The Commissioner of Income Tax having felt that the order passed by the Income Tax Officer was prejudicial to the interests of the Revenue, initiated suo motu revisional proceedings under Section 263 of the Act and issued notice to the assessee. Subsequently, after hearing the objections of the assessee, by order dated March 20, 1990, holding that the income returned by the assessee was liable to be assessed under the head "Income from house property", set aside the assessment orders and directed the Assessing Officer to make fresh assessments computing the income from rentals received from the commercial complex under the head "Income from house property."

5. Aggrieved by the above order of the Commissioner, the assessee went in appeal before the Tribunal. The Tribunal held that in the facts of the case, the income derived by the assessee could have been assessed only as income from business and not under the head "Income from house property". According to the Tribunal, since the land over which the property had been built is a leasehold land, the assessee cannot be treated as the owner of the land which is a condition precedent for treating the income as income from house property under Section 22 of the Act.

6. Taking into account the identical facts as obtained in the case and on review of earlier judgments on the point, a three-judge Bench of the Supreme Court in the case of Commissioner of Income Tax, Bombay etc. Vs. M/s. Podar Cement Pvt. Ltd. etc., AIR 1997 SC 2523 has held that (page 653) :

"We are conscious of the settled position that under the common law, 'owner' means a person who has got valid title legally conveyed to him after complying with the requirements of law such as the Transfer of Property Act, Registration Act, etc. But, in the context of Section 22 of the Income Tax Act, having regard to the ground realities and further having regard to the object of the Income Tax Act, namely, 'to tax the income', we are of the view, 'owner' is a person who is entitled to receive income from the property in his own right."

7. Coming to the facts of the present case; admittedly, the commercial complex has been constructed by the assessee and the rental income is being derived by the assessee alone in its own right. Therefore, for the purpose of Section 22 of the Act, as explained and declared by the Supreme Court, the assessee has to be viewed as the owner. That being the legal position, irrespective of the fact that that one of the objects of the assesses-company is to derive income by leasing sites and constructions thereon, the income has to be necessarily assessed under the head "Income from hous