TaxTMI 
TaxTMI 
1969 (6) TMI 14
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.... with this agreement delivery of possession was given to the purchaser on March 29, 1956. It was stated further that the purchaser paid the whole of the consideration money on the 16th April, 1956, which was credited in the assessee's books in the suspense account. An agreement for sale was drawn up on April 28, 1956. The deed of conveyance transferring the property was executed on the 17th March, 1958, and was registered oh 8th July, 1958. The Income-tax Officer was of opinion that ownership was not transferred until registration of the deed of conveyance. In the premises, during the accounting year in question the ownership remained vested in the assessee. The Income-tax Officer included the property's bona fide annual value in the assessee's total income. The Appellate Assistant Commissioner was also of the same view. He said that the property had not legally passed to the purchaser on the 29th March, 1956, as claimed by the assessee and he sustained the Income-tax Officer's order. The Tribunal referred to the Supreme Court's decision in Commissioner of Income-tax v. Bhurangya Coal Co. and held that the execution of the deed of conveyance having taken place on the 17th ....
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.... Transfer of Property Act. In section 55, sub-sections (4) (5) and (6) of the Transfer of Property Act, it is provided, for instance, that the seller is entitled to the rents and profits of the property till the ownership thereof passes to the buyer and the buyer is entitled, where the ownership of the property has passed to him, to the rents and profits thereof, but all these provisions become applicable " in the absence of a contract to the contrary ". Then again, section 19 of the Transfer of Property Act, inter alia, provides : " Where, on a transfer of property, an interest therein is created in favour of a person without specifying the time when it is to take effect, or in terms specifying that it is to take effect forthwith or on the happening of an event which must happen, such interest is vested, unless a contrary intention appears from the terms of the transfer ........ " Counsel for the assessee states that in view of these provisions it is permissible to create title with effect from a date specified in a document of transfer. Counsel submits that, in terms of the agreement between the parties, possession in the instant case, was delivered on the 29th March, 1956,....
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....nnot be said to be the owner of the property for the purpose of section 9 of the Indian Income-tax Act, 1922. Neither can the annual letting value of the property so vested be included in the assessee's income, nor can he be allowed deductions under section 9. Mr. Roy cites this authority of the Delhi High Court in support of his contention that the word " owner " in section 9 of the 1922 Act must mean a person having control and domain over the property. In other words, " ownership " in section 9 refers to possession of those rights in relation to property which results in the earning of income. The reason is that income-tax is a tax on income and unless a parson has out of the property, either actual or potential earning capacity, he cannot be charged under section 9. It should be pointed out that under section 6(1) of the Pakistan (Administration of Evacuee Property) Ordinance, 1949, " all evacuee property shall vest and shall be deemed always to have vested in the Custodian with effect form the 1st day of March, 1947. " In these premises there could be no question of any " owner " apart from the custodian during the period the property remained so vested. Mr. Roy has a....
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....is pocket as income. It was not income that went or could go into the pocket of the respondent as income in any of the years in question. How then can it be said to have reached his pocket as income on his subsequent reinvestiture ? What was he reinvested in ? It is said that he was reinvested in whatever substance remained of the radical right belonging to him all along. But the radical right of a bankrupt in his sequestrated estate is nothing but a right of reversion to the balance remaining after the creditors are satisfied for which balance he is entitled to call the trustee to account. It is not, I think, a specific right to any particular assets, or a right which applies specifically to that part of the reversion which originated from revenue on the one hand and that part which originated from capital on the other hand. The argument for the respondent must, I think, go this length--that it was the duty of the trustee to make the claim for the respondent's 'personal allowance' when he paid income tax on the income arising from the trust estate. A glance at section 18 of the Finance Act, 1920, shows how unworkable and impossible that would be. The trustee (who represents the cr....
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....uding all its immovable and movable properties and assets to a public company with effect from December 1, 1946. The assessee undertook to execute a conveyance or any other document which might be necessary for the portions of the premises which did not pass by delivery of possession. Possession of all the properties was delivered on December 1, 1946. For some reason or other, there being no suggestion that it was with the intention of avoiding payment of any tax, the sale deed for the immovable properties was not executed until the 26th February, 1949. The sale deed recited that it was executed " for the purpose of formally transferring the lands, hereditaments and premises " mentioned in the agreement for sale. This court had held that the word " sale " was not defined in the Indian Income-tax Act, 1922, and in order to find out the legal implication of a " sale " one must resort to the Transfer of Property Act in the case of immovable property and to the Sale of Goods Act for movable property. And under section 8 of the Transfer of Property Act, even though the assessee had parted with the immovable properties to all intents and purpose as from December 1, 1946, in law the owner....
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....ecific performance of the contract or to obtain a decree for its rescission. These provisions show that a contract for sale followed by payment of money may create a charge on the property or give rise to a suit for specific performance or rescission ; but it does not have the effect of passing the title thereto. Incidentally again, it may be useful to refer to some of the provisions of section 40 of the Transfer of Property Act which prescribes, inter alia, that where a third person is entitled to the benefit of an obligation arising out of contract, and annexed to the ownership of the immovable property, but not amounting to an interest therein or easement thereon, such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected thereby, but not against a transferee for consideration and without notice of the right or obligation nor against such property in his hands. The illustration to this section runs thus : " A. contracts to sell Sultanpur to B. While the contract is still in force he sells Sultanpur to C., who has notice of the contract. B may enforce the contract against C. to the same extent as aga....
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....You have to find something, either express contract, or at least something from which it is a necessary implication that such a contract exists, in order to exclude the charge given by the statute. In the case of Chhatra Kumari Devi v. Mohan Bikram Shah, at page 202, also it is stated : " The Indian law does not recognise legal and equitable estates : ... By that law, therefore, there can be but one 'owner', and where the property is vested in a trustee, the 'owner' must, their Lordships think, be the trustee. " Before we summarise our conclusions we ought to refer to a few other cases and certain provisions of the relevant documents we have to consider in this reference. In Commissioner of Income-tax v. Bhurangya Coal Co., the facts briefly were that on March 16, 1946, the coal company, which was the owner of a colliery, entered into an agreement with the promoters of another company to sell the colliery which included both movable and immovable properties for Rs. 6,10,000. The schedule to the deed of agreement set out the details of the properties in two parts : the first part included immovable property whose value was fixed at Rs. 2,00,600 and the second part consis....
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.... it also does not depend on the capacity of the owner to receive the bona fide annual value (see the decision of the Bombay High Court in D. M. Vakil v. Commissioner of Income-tax, and the decision of the Calcutta High Court in Commissioner of Income-tax v. Biman Bihari Shaw, Shebait). In the instant reference, even if we assume that the Punjab Produce & Investment Co. Ltd. was the beneficial owner with effect from the 29th March, 1956 (although there is no such concept in Indian law), the assessee would be liable for income-tax as the legal owner under section 9. Two other cases may be considered in this reference. In Alapati Venkataramaiah v. Commissioner of Income-tax, the appellant owned certain lands and buildings and plant and machinery thereon. He carried on the business of manufacture of tiles and bricks. He entered into an agreement on March 17, 1948, with one V to sell his assets including stock and goodwill for a sum of Rs. 2 lakhs to a company. Option was reserved for the company to adopt the agreement. On March 17, 1948, the appellant handed over possession of the lands and buildings, plant and machinery to the company. On March 20, 1948, the company credited the su....
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....ber, 1928, the son was credited with the share of profits to which he was entitled under the partnership deed. Rowlatt J. has held that the partnership constituted by the deed commenced on the date of the deed and there was no evidence before the Commissioners of the existence of the partnership before that date. At page 197 Rowlatt J. says : " I think this is a plain case. There is no sort of doubt at all about the legal position as I understand it. When people enter into a deed of partnership and say that they are to be partners as from some date which is prior to the date of the deed, that does not have the effect that they were partners from the beginning of the deed. You cannot alter the past in that way. What it means is that they begin to be partners at the date of the deed, but then they are to take the accounts back to the date that they mentioned as from which the deed provides that they shall be partners. There is no sort of doubt at all that that is the only effect which such a deed can have. No deed can alter the past, but of course, it is quite possible that before the deed was executed the partners may in point of fact have been carrying on business in partnership....