House property income turns on registration-based ownership, while annual value remains capped by standard rent under rent control.

For house property income under section 23 of the Income-tax Act, ownership continued until registration of the conveyance deed, so the assessee remained taxable on the property income up to that date. Where no rent was actually received, the annual value had to be computed on a notional basis, but in a rent-controlled area it could not exceed the standard rent. The assessment was therefore sustained on the ownership issue, while the annual value question required fresh determination by reference to standard rent.

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Issues: (i) Whether income from house property was assessable in the hands of the assessee up to the date of registration of the conveyance deed or only up to the date of its execution. (ii) Whether, where no rent was received during the year, the annual value of the property had to be determined on the basis of standard rent.

Issue (i): Whether income from house property was assessable in the hands of the assessee up to the date of registration of the conveyance deed or only up to the date of its execution.

Analysis: The property was sold under a conveyance executed earlier but registered later. For the purpose of section 23 of the Income-tax Act, 1961, income from property is taxable in the hands of the owner. The Court followed the Bombay High Court line of authority holding that, in relation to house property income, ownership continues until the conveyance is registered, and distinguished decisions dealing with capital gains and other legal contexts.

Conclusion: The assessee remained liable to be assessed on the property income until registration of the conveyance deed, and this issue was decided in favour of the Revenue.

Issue (ii): Whether, where no rent was received during the year, the annual value of the property had to be determined on the basis of standard rent.

Analysis: Under section 23 of the Income-tax Act, 1961, annual value is the sum for which the property might reasonably be expected to let from year to year. In a rent-controlled area, that notional letting value cannot exceed the standard rent. The Court applied the settled principle that standard rent governs the computation of annual value and noted that the actual standard rent had not been ascertained on the record.

Conclusion: The annual value had to be worked out with reference to standard rent, and the matter was remitted for that purpose, with this issue decided in favour of the assessee.

Final Conclusion: The assessment on house property income was sustained on the question of ownership till registration, but the valuation of annual value required fresh determination on the basis of standard rent.

Ratio Decidendi: For house property income, ownership continues until registration of the conveyance deed, and where rent control applies, the annual value under section 23 is limited by the standard rent that the property can reasonably fetch.

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