Legal ownership governs house-property income, while rent from non-owned flats may be taxed as income from other sources.

Section 22 applies only where the assessee is the legal owner of the property; an agreement to sell, payment of consideration and possession do not amount to ownership without a registered conveyance, even if section 53A rights exist. On that basis, the assessee was not treated as owner of the three flats for house-property assessment. Where rent is received by a person who is not the legal owner, the income is not outside tax merely because section 22 does not apply; it is assessable under the residuary head as income from other sources. The assessment was therefore upheld on both questions.

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Issues: (i) Whether the assessee could be treated as the owner of the three flats for the purpose of assessment under the head "Income from house property"; (ii) Whether, if the assessee was not the owner, the rent received from the flats was taxable under the head "Income from other sources".

Issue (i): Whether the assessee could be treated as the owner of the three flats for the purpose of assessment under the head "Income from house property".

Analysis: The statutory scheme in sections 22 to 24 proceeds on assessment of income from house property in the hands of the owner. Ownership of immovable property, where title has not passed by a registered conveyance, is not established merely by an agreement to sell, payment of consideration, and delivery of possession, even if the transferee may have enforceable rights under section 53A of the Transfer of Property Act, 1882. Following the consistent line of authority within the jurisdiction, the absence of a registered sale deed meant that the assessee had not become the owner in law.

Conclusion: The assessee was not the owner of the three flats for assessment under section 22.

Issue (ii): Whether, if the assessee was not the owner, the rent received from the flats was taxable under the head "Income from other sources".

Analysis: The head "Income from house property" applies only to income from property owned by the assessee. Income derived from property by a person who is not the legal owner is not excluded from tax merely because section 22 does not apply. Such income falls within the residuary head when the recipient is in actual enjoyment of the income and no other specific head governs the charge. The Court disagreed with the contrary view that non-applicability of section 22 necessarily makes the income non-taxable.

Conclusion: The rent was assessable under section 56 as income from other sources.

Final Conclusion: The assessment made by the Income-tax Officer was upheld and the reference was answered in favour of the Revenue on both questions.

Ratio Decidendi: For the head of income relating to house property, charge under section 22 is confined to the legal owner; where the recipient of rent is not the owner, the income may be taxed under the residuary head of income from other sources.

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