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Issues: (i) Whether the Commissioner had jurisdiction under section 263 of the Income-tax Act, 1961, despite the pendency of an appeal before the first appellate authority; and (ii) whether the assessee was liable to be assessed on the notional income from flats for the period between handing over possession and registration of the sale deeds.
Issue (i): Whether the Commissioner had jurisdiction under section 263 of the Income-tax Act, 1961, despite the pendency of an appeal before the first appellate authority.
Analysis: Pendency of an appeal before the first appellate authority does not by itself divest the Commissioner of revisional jurisdiction. The revisionary power could be exercised on the material before the Commissioner, and the mere fact that an appeal was pending did not whittle down that authority.
Conclusion: The issue was decided against the assessee.
Issue (ii): Whether the assessee was liable to be assessed on the notional income from flats for the period between handing over possession and registration of the sale deeds.
Analysis: For the purpose of section 22 of the Income-tax Act, 1961, ownership must be understood in the context of the right to receive and enjoy the income from the property. The assessee had handed over possession and received the consideration, while the purchasers were in occupation and enjoyment of the flats. The assessee retained only legal title pending registration, and the same income had already been assessed in the hands of the purchasers. The Tribunal applied the principle that the same income cannot be taxed in two hands and held that mere titular ownership, without enjoyment of the income, was insufficient in these circumstances.
Conclusion: The issue was decided in favour of the assessee.
Final Conclusion: The revisional order could not be sustained on the merits, and the quantum appeal was restored for fresh disposal after setting aside the earlier disposal as infructuous.
Ratio Decidendi: For section 22 of the Income-tax Act, 1961, the relevant ownership is ownership in relation to the right to enjoy the income from the property, and mere legal title without such enjoyment does not justify taxing the same income in the assessee's hands when it is already assessable in the hands of the person in possession.
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