Real ownership for property tax under Section 22 depends on effective dominion, not later registration of title

Section 22 of the Income-tax Act, 1961 taxes the real and effective owner of property, not merely the person in whom the registered conveyance is ultimately recorded. Where the transferor executed the sale deed, presented it for registration, received consideration, and parted with possession while the transferee collected rent, the transferor was treated as having divested dominion over the property. Registration obtained later was taken to relate back to execution and presentation of the deed, so the property income had already shifted to the transferee for tax purposes and was not assessable in the transferor's hands.

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Issues: Whether the property income from the assessee's 1/2 share in Tiecicon House was assessable in the assessee's hands for the assessment year 1972-73 after execution and presentation of the sale deed for registration, though the deed was registered later.

Analysis: Section 22 of the Income-tax Act, 1961 fastens tax liability on the owner of the property, but ownership for this purpose is not confined to the person in whose name the registered conveyance ultimately stands. The transferor had executed the sale deed, presented it for registration, received the consideration and parted with possession, while the transferee was receiving the rent. In that situation, the transferor had ceased to exercise any real right of ownership. The court treated the registration later obtained as relating back to the execution and presentation of the instrument and held that the income had already shifted to the transferee for taxation purposes.

Conclusion: The property income was not assessable in the assessee's hands; the reference was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: For section 22 of the Income-tax Act, 1961, the taxable owner is the person who has the real and effective ownership rights in the property, and where the transferor has executed the conveyance, presented it for registration, and divested himself of dominion, the income is assessable in the hands of the transferee.

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