K. Venkataswami, J. - (1.) In all these cases the scope of Section 22 of the Income Tax Act, 1961 (hereinafter called the Act) arises for consideration.
(2.) Brief facts are necessary to appreciate the question that arises for our consideration.
(3.) The respondent in Tax Reference Case Nos. 9-10/86 is a company and an assessee under the Act (hereinafter called the assessee). It owns four flats bearing Nos. 231, 232, 241 and 242 in a building called as "Silver Arch" on Nepeansea Road, Bombay. The builders of the said building are M/s. Malabar Industries Pvt. Ltd. Out of the four aforesaid flats, two were directly purchased by the respondent-company from the builders and the other two were purchased by its sister concern and subsequently by the assessee. The possession of the flats was taken after payment of consideration in full some time in August, 1973. It is common ground that all these flats have been let out to various persons. The rental income from these flats was included in the Return for the assessment years in question, namely, 1975-76 and 1976-77. It was the case of the assessee that the rental income from the flats was assessable as income from other sources under Section 56 of the Act inasmuch as the assessee-company was not the legal owner of the property in the flats. Such a claim was put forward before the Assessing Officer mainly on the ground that the title to the property (four flats) had not been conveyed to the Co-operative Society which was formed by the purchasers of the flats and that so long as the ownership was not transferred in the name of the assessee the rental income from the flats could not be assessed as income from house property (under Section 22 of the Act).;