- (1.) DIPAK KUMAR SEN, J. 1. The facts relevant and the proceedings leading up to this reference are, inter alia, that one Champabati Devi Chamaria purchased out of her stridhan four immovable properties at Calcutta, viz., 21A, Shakespeare Sarani; 114/1A, Cotton Street; 6, Madan Mohan Street and 106, Diamond Harbour Road. Subsequently, Champabati sold undivided 1% share of the said properties each to ten of her close relatives for Rs. 17,000. The transaction was effected by registered deeds. Champabati and the other co-owners of the said properties thereafter formed a joint stock company of the name of M/s Champa Properties (P) Ltd., the assessee. Champabati held 90% of the shares in the company and the other co-shares held the balance 10%. The assessee was subsequently registered under Part IX of the Companies Act, 1956, as a company as defined in s. 566(1) of the Companies Act. A certificate of incorporation was issued on 20th Sept., 1968. It was the case of the assessee that under s. 575 of the Companies Act, the immovable properties owned by Champabati and the other co-owners automatically vested in it on incorporation and the assessee claimed the said properties as its own.
(2.) THE assessee was assessed to income-tax in the asst. yr. 1970- 71, the accounting period ending on 30th Sept., 1969. In its return, the assessee claimed ownership of the said properties and offered the income arising out of the said properties for being taxed. The ITO obtained the opinion of the Government Solicitor and came to the conclusion that in the absence of a deed of conveyance, the assessee cannot be held to be the owner of the said properties as they still stood in the name of Champabati. The ITO, however, held that as the assessee had filed its return showing income from the said properties, as a protective measure, the same would be treated as income of the assessee. It was observed by the ITO that actually the income accruing from the said properties ought to be assessed in the hands of Champabati in whose name the properties stood. Being aggrieved, the assessee preferred an appeal, inter alia, from this part of the order of assessment to the AAC. It was contended before the AAC that in the records of the Calcutta Municipal Corporation, the properties stood in the name of the assessee and not Champabati. A decision of this Court in Ram Sundari Roy vs. Somendra Lal Roy (1947) ILR 2 Cal 1, was cited and it was contended that where a company obtained its certificate of incorporation under Part VIII of the Indian Companies Act, 1913 (which is in pari materia with Part IX of the Companies Act, 1956), properties would pass to and vest in the company even in the absence of a registered document of transfer. It was contended that the said properties were the properties of the assessee with effect from the date of incorporation of the assessee and the income from the same should have been held to be the income of the assessee and taxed as such, and not as a protective measure. The AAC accepted the contentions of the assessee and held that the assessee was the owner of the said properties on and from its date of incorporation; that the ITO was bound to treat the properties as the properties of the assessee and that there was no ground to make a protective assessment in the manner it was done.
(3.) BEING aggrieved, the Revenue preferred an appeal from the order of the AAC to the Tribunal. The Tribunal considered and construed s. 246(c) of the IT Act, 1961, and held that the assessee could have a right to prefer an appeal against an order of the ITO only if the conditions set out in the said section were satisfied. The Tribunal held that the grievance of the assessee in the appeal before the AAC was not one which entitled the assessee to prefer an appeal under s. 246(c) of the Act and, therefore, the AAC was not justified in entertaining the appeal on the ground on which it was preferred and adjudicating on the same. It was held further that the observation of the ITO that the assessment was being made only as a protective measure meant that a right to proceed against some other person in respect of the said properties was being reserved. The assessee, it was held, was not prejudiced in any manner by the said assessment. The Tribunal noted that no assessment had been made on anybody else in respect of the income from the said properties which had been assessed in the hands of the assessee. The Tribunal recorded that in spite of the observations in the order of assessment, no further assessment might be made at all on any other person and if such an assessment was made, the other person might have a right of appeal. The decision of the AAC in respect of the ownership of the said properties was held to be academic in nature. The Tribunal vacated the findings of the AAC holding that all his observations and findings should be treated as not est. The appeal of the Revenue was allowed.;