House-property ownership for tax follows beneficial possession, not bare legal title, where flats were already handed over under an enforceable transfer.

For house-property taxation, "owner" means the person entitled to exercise the rights of ownership in substance and in his own right, not merely the person retaining bare legal title after possession has passed under an enforceable transaction. On that principle, the annual value of flats could not be assessed in the transferor's hands for the period between delivery of possession and execution and registration of the sale deed. The later insertion of clause (iiia) in section 27 was treated as clarificatory and aligned the statute with the position that a person in possession under section 53A of the Transfer of Property Act is to be treated as owner for house-property tax purposes.

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Issues: Whether the annual value of flats, after possession had been handed over but before execution and registration of the sale deed, could be assessed in the hands of the assessee under section 22 of the Income-tax Act, 1961.

Analysis: The governing principle is that for the purposes of taxing income from house property, the expression "owner" in the charging provision refers to the person who can exercise the rights of ownership in his own right. The Court followed the Supreme Court's construction of ownership in the context of property income and held that mere legal title, when the transferee is in possession under a completed transaction and is entitled to the benefits of the property, does not justify taxing the transferor for the interregnum. The later insertion of clause (iiia) in section 27 was treated as clarificatory and as bringing the statutory position in line with that principle by deeming a person in possession under section 53A of the Transfer of Property Act, 1882 to be the owner for house-property taxation.

Conclusion: The annual value could not be assessed in the assessee's hands for the period between delivery of possession and registration of the flats; the question was answered in favour of the assessee.

Ratio Decidendi: For house-property taxation, "owner" means the person who, in substance and in his own right, is entitled to exercise the rights of ownership, and not merely the person retaining bare legal title after possession has passed to the transferee under an enforceable transaction.

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