Deemed ownership under the income tax law applies where month-to-month tenancy is unproved and lease terms show long-term occupation.

For section 27(iiib) read with section 269UA(f)(i), the real character of possession and lease arrangements must be determined from reliable surrounding evidence. On the facts, the claim that Kantilal House was occupied under a month-to-month tenancy was not substantiated; continuous occupation since 1948 and successive long-term arrangements showed that the statutory exception to deemed ownership did not apply. The assessee was therefore treated as a deemed owner, and the rental receipts from Kantilal House were chargeable under section 22 as income from house property.

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Issues: (i) Whether the assessee's occupation of Kantilal House was only a month-to-month tenancy so as to fall within the exception to deemed ownership under section 27(iiib) of the Income-tax Act, 1961. (ii) Whether the rental income from Kantilal House was assessable under the head "Income from House Property".

Issue (i): Whether the assessee's occupation of Kantilal House was only a month-to-month tenancy so as to fall within the exception to deemed ownership under section 27(iiib) of the Income-tax Act, 1961.

Analysis: The assessee failed to substantiate month-to-month tenancy with reliable contemporaneous evidence. The materials showed continuous occupation since 1948 and successive long-term arrangements with Bank of Baroda extending well beyond twelve years. On the surrounding circumstances, the alleged monthly tenancy was not accepted, and the exception carved out in section 27(iiib) was held inapplicable. The aggregate lease period satisfied the statutory threshold in section 269UA(f)(i).

Conclusion: The assessee was not held to be a month-to-month tenant and was treated as a deemed owner under section 27(iiib) read with section 269UA(f)(i).

Issue (ii): Whether the rental income from Kantilal House was assessable under the head "Income from House Property".

Analysis: Once deemed ownership under section 27(iiib) was attracted, the income from the property fell within the charging framework of section 22. The assessee's contention that the income should escape taxation or be assessed under some other head was rejected, and the surrounding documents and lease terms supported assessment as house property income.

Conclusion: The rental income from Kantilal House was rightly assessable as "Income from House Property".

Final Conclusion: The assessee's challenge to the tax treatment of the rental receipts failed, and the assessment made by the revenue authorities was sustained.

Ratio Decidendi: For purposes of section 27(iiib) read with section 269UA(f)(i), the real nature of possession and lease arrangements must be determined from the surrounding circumstances and reliable evidence; where the lease exceeds the statutory threshold and the month-to-month tenancy claim is unproved, the assessee is a deemed owner and the resulting rental income is chargeable under section 22.

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