House-property taxation and deemed ownership: sub-letting income falls outside the head where the lessee holds only an 11-month lease.

Income derived by a lessee from sub-letting is not taxable as income from house property where the lessee cannot be treated as the owner under sections 22 to 27 of the Income-tax Act, 1961. Section 22 taxes only the annual value of property owned by the assessee, while section 27 expands ownership for that purpose but excludes a person whose rights arise only under a lease from month to month or for a term not exceeding one year. On the stated facts, an 11-month lease with an option to continue fell within that exclusion, so the deeming definition of owner did not apply and the sub-let income could not be brought under the head "Income from house property."

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Issues: Whether income derived by a lessee from sub-letting a leased property is chargeable as income from house property, and whether the lessee can be treated as the owner of the property for the purposes of sections 22 to 26 of the Income-tax Act, 1961.

Analysis: The computation of income from house property is governed by sections 22 to 27 of the Income-tax Act, 1961. Section 22 taxes the annual value of property of which the assessee is the owner. Section 27 expands the meaning of owner for that purpose, but expressly excludes a person whose rights are only by way of a lease from month to month or for a period not exceeding one year. On the facts, the lease was for 11 months, with an option to continue for a further period, so the assessee fell within the statutory exclusion and could not be treated as owner under section 27(iiib).

Conclusion: The income from the sub-let property was not assessable as income from house property in the hands of the assessee; the Revenue's appeal failed.

Final Conclusion: The statutory definition of owner for house-property taxation does not extend to a lessee holding under a lease from month to month or for a term not exceeding one year, and income from such sub-letting cannot be brought to tax under the head "Income from house property" on that footing.

Ratio Decidendi: For the purposes of sections 22 to 27, a lessee whose rights are confined to a lease from month to month or for a period not exceeding one year is excluded from the deeming definition of owner, and therefore the sub-letting income cannot be assessed as income from house property on that basis.

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