Property income taxation turns on beneficial ownership and entitlement to income, not merely formal title.

For property-income taxation, ownership is not limited to bare legal title; the decisive test is whether a person exercises the rights of an owner in his own right and is entitled to receive the income. Where immovable property forms part of a business undertaking transferred under an agreement for sale and assignment deed, but the registered conveyance follows later, income attributable to the intervening period is not necessarily taxable in the transferor's hands. On these principles, the proportionate property income was not assessable in the transferor's hands and the Tribunal's reduction was upheld.

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Issues: Whether proportionate income from immovable property transferred under an agreement for sale, but conveyed by registered deed at a later date, was assessable in the hands of the transferor for the intervening period.

Analysis: The relevant assessment year was 1979-80. The transfer of the business and industrial undertaking had taken place under an agreement for sale and assignment deed, while the immovable properties forming part of the undertaking were subsequently transferred by a registered document. The governing principle applied was that for the purpose of property income, ownership is not confined to bare legal title; the liable person is the one who can exercise the rights of an owner in his own right and who receives, or is entitled to receive, the income from the property in his own right.

Conclusion: The proportionate property income was not taxable in the hands of the assessee. The Tribunal was in allowing the reduction of Rs. 2,69,194, and the question was answered in favour of the assessee and against the Revenue.

Final Conclusion: The reference was answered for the assessee, and the assessment of the disputed property income in the transferor's hands was disapproved.

Ratio Decidendi: For property-income taxation, the owner is the person who exercises the rights of ownership in his own right and is entitled to receive the income, not merely the holder of formal or technical title.

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