Deemed ownership under income tax law requires statutory conditions; sub-license fee was assessable as income from other sources.

For assessment under the head income from house property, ownership under Section 22 of the Income-tax Act, 1961 must be shown, including statutory deemed ownership under Section 27. An exclusive licence or unregistered arrangement, without meeting the conditions for deemed ownership, does not make the assessee an owner. On that basis, sub-license fee received by the assessee could not be taxed as house property income; as it did not fall under any other specific head, it was assessable under the residuary head as income from other sources.

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Issues: (i) whether a licensee with exclusive rights under the agreement could be treated as the owner for the purposes of assessment under the head income from house property; (ii) whether the sub-license fee received by the assessee was taxable under the head income from house property or under the residuary head income from other sources.

Issue (i): whether a licensee with exclusive rights under the agreement could be treated as the owner for the purposes of assessment under the head income from house property

Analysis: Section 22 of the Income-tax Act, 1961 charges to tax the annual value of property of which the assessee is the owner. Section 27 of the same Act defines the categories of deemed ownership for the purposes of Sections 22 to 26. The licence arrangement in question was not a registered lease deed, did not satisfy the statutory conditions for deemed ownership, and the mere renewal of a licence did not, by itself, create ownership rights. The case law relied upon by the assessee did not assist because the statutory preconditions for treating the assessee as owner were not established.

Conclusion: The assessee was not the owner within the meaning of Section 27 of the Income-tax Act, 1961, and could not claim assessment under Section 22.

Issue (ii): whether the sub-license fee received by the assessee was taxable under the head income from house property or under the residuary head income from other sources

Analysis: Once the assessee was found not to be the owner for Section 22 purposes, the receipt could not be taxed as income from house property. The income also did not fall under salary, business income, or capital gains. It therefore fell within the residuary head under Section 14 of the Income-tax Act, 1961. The amount received as sub-license fee was accordingly assessable as income from other sources.

Conclusion: The sub-license fee was taxable under the head income from other sources and not under income from house property.

Final Conclusion: The questions of law were answered against the assessee and in favour of the Revenue, and the appeals failed on merits.

Ratio Decidendi: For assessment under Section 22 of the Income-tax Act, 1961, the assessee must establish ownership or statutory deemed ownership under Section 27; a mere licence or unregistered arrangement without satisfying the statutory conditions does not make the assessee an owner, and the resulting receipt is taxable under the residuary head if no other specific head applies.

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