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Issues: (i) Whether the rental income from the multi-storeyed building was assessable in the hands of the three brothers as owners of the superstructure and whether the unregistered arrangements could divest them of ownership for the purpose of house property taxation; (ii) whether the rental income said to be receivable from M/s Indraprastha Builders (P) Ltd. and the claim for deduction in respect of unrealised rent required fresh examination.
Issue (i): Whether the rental income from the multi-storeyed building was assessable in the hands of the three brothers as owners of the superstructure and whether the unregistered arrangements could divest them of ownership for the purpose of house property taxation.
Analysis: Tax under the head income from house property depends on ownership, not merely on occupation or possession. The unregistered and improperly stamped arrangements could not, by themselves, create a leasehold interest in the land in favour of Shri S.C. Jain or M/s Indraprastha Builders (P) Ltd. under the applicable property law provisions. At the same time, ownership of the superstructure could not be assumed to follow ownership of the land, because in Indian law a person may own a superstructure erected on another's land. The crucial question was who made the investment in the construction and what rights flowed from the agreements; that question had not been properly examined by the lower authorities.
Conclusion: The issue was not finally determined on merits and was remitted for fresh decision; the Revenue's and assessee's respective contentions were left open for re-adjudication.
Issue (ii): Whether the rental income said to be receivable from M/s Indraprastha Builders (P) Ltd. and the claim for deduction in respect of unrealised rent required fresh examination.
Analysis: The direction to assess rent allegedly payable by M/s Indraprastha Builders (P) Ltd. and the alternative claim for deduction of unrealised rent depended on the underlying agreements and on satisfaction of the statutory conditions governing such deduction. Those materials and conditions had not been properly examined by the lower authorities, and this aspect was also linked to the unresolved ownership question.
Conclusion: The matter was set aside for fresh disposal after examination of the relevant agreements and statutory requirements.
Final Conclusion: The controversy over assessability of rental income and the related cross-objections was restored to the Assessing Officer for fresh determination in accordance with law.
Ratio Decidendi: For taxation under the head income from house property, ownership must be determined with reference to the real ownership of the superstructure and the rights created by the governing arrangements, and unregistered instruments cannot by themselves create transferable interest in immovable property.
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