The owner of a property for the purposes of Sec. 22 of the Income-tax Act, 1961, is the person who has the physical possession of the property, is entitled to the income from the property, and has the power to dispose of the property.

S.K.Jha and A.K.Sinha JJ.

1. The questions referred to in these cases for opinion of this Court under Sec.256(2) of the Income-tax Act, 1961 (hereinafter to be referred to as the Act) are identical, the facts being the same. Hence, a consolidated statement of the cases, has been submitted by the Income-tax Appellate Tribunal, B Bench, Patna, to this Court referring the following questions of Jaw for the opinion of this Court:

1. Whether on the facts and in the circumstances of this case the Tribunal was justified in holding that as the assessee was not the legal owner, the income from the property was not assessable at all in its hands? 2. Whether on the facts and in the circumstances of this case the Tribunal was justified in not answering the alternative question as to whether the income was assesssable under Sec. 56 if it was not assessable under Sec.22 of the Income-tax Act, 1961?

2. Taxation Case 140 relates to the assessment year 1965-66 141 to assessment year 1966-67 and 142 to that of 1963-64.

3. The facts as emerge from the statement of the case that has been submitted to this Court by the Tribunal are admitted at all hands and are these The assessee is a private limited company and derives income from house properties alleged to be owned by it and from investments. We are not concerned with the question of investments. The Sahay family was owning several properties. By an agreement dated the 19th day of February, 1962 it sold immovable properties consisting of lands and buildings to the assessee company for a consideration of Rs. 12,83,000/-. The physical possession of the properties sold by the Sahay family was taken over by the assessee company, but no conveyance deed was executed and registered in favour of the assessee company The company, however, collected rent, which was assessed under Sec.22 of the Act as income from the house properties. The Income-tax Officer allowed deduction as provided under the law while computing the income from the house property. The assessee claimed more expenses before the Appellate Assistant Commissioner in appeal but the order of the assessing officer was confirmed. When the assessee went up in further appeal before the Tribunal it sought permission which was granted, to take an additional ground to the following effect:

that the income from house property should not have been assessed under Sec.22 as it is not the legal owner of the house property who can be taxed under this section and since in the present case the company is not the legal owner of the House properties from which rental income is derived, it cannot be taxed under Sec.22.

4. It was further urged on behalf of the assessee that the company not being the owner within the meaning of Sec.22 of the Act, the income from the house property would not be taxed in its hands at all. Alternatively it was contended that even though the rental income was to be assessed in the hands of the assessee. it could be assessed only under Sec. 56 of the Act as income form other sources and not from house property.

5. About the allowance of expenses, it was urged that if the first contentions were accepted, the question of allowance of the expenses against that income would not arise but if the income were to be assessed under the heading other sources all expenses incidental to the earnings should be allowed on verification. The assessee relied on the decision in the case of Commissioner of Income-tax West Bengal V/s. Ganga Properties Ltd. 77 I.T.R. 037. The Revenue however. contended that it was undisputed that the deed of conveyance was not executed in favour of the assessee company in terms of clause 4 of the agreement. The assessee company was yet having the physical possession of the property sold to it and, therefore, it was the beneficial owner. As such, the income from property was rightly assessed in its hands.

6. The Tribunal, after considering Sec.22 of the Act and the various clauses of the agreement along with Sect