Law:

Section:

Section 22 of the Income-tax Act, 1961 - Income from house property - Chargeable as - Assessment years 1985-86 and 1986-87 - One of directors of assessee-company had taken certain land on a long-term lease under a registered lease deed - He executed a registered deed of transfer in favour of assessee transferring his leasehold rights - Subsequently assessee built a commercial complex on aforesaid land and allotted same to various parties - Whether rental income derived by assessee was assessable as income from house property and not as business income - Held, yes FACTS One of the directors of the assessee-company had taken certain lands on long-term lease under a registered lease deed. He executed a registered deed of transfer in favour of the assessee transferring his leasehold rights. Subsequently, the assessee built commercial complex on the said land and allotted the same to various parties and earned income therefrom. For the assessment years 1985-86 and 1986-87, the Assessing Officer completed the assessment computing certain loss. Thereafter the Commissioner initiated proceedings under section 263 and held that the income returned by the assessee was liable to be assessed under the head 'Income from house property', set aside the assessment orders and directed the Assessing Officer to make fresh assessments. On appeal by the assessee, the Tribunal held that the income derived by the assessee could have been assessed only as income from business and not under the head 'Income from house property' and since the land over which the property had been built was a lease-hold land, the assessee could not be treated as the owner of the land which was a condition precedent for treating the income as income from house property under section 22. On appeal under section 260A : HELD In the instant case, admittedly, the commercial complex had been constructed by the assessee and the rental income was being derived by the assessee alone in its own right. Therefore, for the purpose of section 22 as explained and declared by the Supreme Court in CIT v.Podar Cement (P.) Ltd. [1997] 226 ITR 625/ 92 Taxman 541 , the assessee had to be viewed as an owner. That being the…

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