Commissioner of Income Tax vs KASHIRAM AGARWALLA and SONS (HUF)

P. G. Agarwal, J.

Heard Mr. G. K. Joshi, learned counsel for the appellant, and Dr. Ashok Saraf, learned senior counsel assisted by Mr. S. K. Agarwal, appearing for the respondent-assessee.

This appeal is preferred against the order dated 19-6-2000, passed by the Income Tax Appellate Tribunal, Gauhati Bench, in I. T. A. No. 22/ Gauhati of 1997, for the assessment year 1991-92.

The undisputed fact is that the assessee, Kashiram Agarwalla and Sons, transferred land belonging to the Hindu undivided family to the firm by way of capital contribution. Kashiram Ramgopal (Agencies) is a partnership firm. Although the land was given to the partnership firm, there was no legal transfer of land by way of any documentary conveyance, evidencing the transfer. The assessing officer held that the land in question was not legally transferred and it will be assessed in the hands of the Hindu undivided family. The Tribunal disagreed with the view of the assessing officer and held as the land was given as a capital contribution to the partnership firm, the income from such land is not assessable in the hands of the assessee.

According to learned counsel for the appellant, the following substantial question of law arises in the present case :

"(i) Whether, on the facts and in the circumstances of the case, the Commissioner (Appeals) as well as the Tribunal did not err in law in coming to the conclusion that the income from house property amounting to Rs. 2,08,740.14 is not to be assessed in the hands of the assessee and directing deletion of the same from the income of the assessee ?"

Mr. Joshi, learned counsel for the appellant, submitted that the above question was answered by this court in CIT v. Kashiram Ramgopal (Agencies) (1998) 4 DTC 422 (Gau) : (1998) 231 ITR 10--Income Tax Reference No. 1 of 1997, disposed of on 4-3-1998. Although this court held that so long as there is no document of evidencing the registration of the transfer, in favour of the partnership firm by its real owner, in the eye of law, no right whatsoever has been transferred for the land in question. The court further observed as follows (page 12) :

"But we make it clear that as and when such incident comes to the notice of the authority that the rights in the landed property have been actually transferred and those rights are being enjoyed by any person who is liable to pay taxes, it is open to the authority to take appropriate action."

Dr. Saraf, on the other hand, submits that the dispute raised by the appellant stand answered by the Apex Court in the case of Commissioner of Income Tax, Bombay etc. Vs. M/s. Podar Cement Pvt. Ltd. etc., . The Apex Court after considering a catena of judgments of various High Courts, held that the requirement of registration of the sale deed u/s 22 of the Income Tax Act, 1961, is not warranted. The Apex Court further held as follows (headnote) "Hence, though under the common law "owner" means a person who has got valid title legally conveyed to him after complying with the requirements of law such as the Transfer of Property Act, the Registration Act, etc,, in the context of section 22 of the Income Tax Act, 1961, having regard to the ground realities and further having regard to the object of the Income Tax Act, namely, to tax the income, "owner" is a person who is entitled to receive income from the property in his own right. The requirement of registration of the sale deed in the context of section 22 is not warranted."

In CIT v. Kashiram Ramgopal (Agencies) (supra)--Income Tax Reference No. 1 of 1997, the reference was answered in favour of the assessee but we find that the question was not replied in categorical terms. However, in view of the decision in Commissioner of Income Tax, Bombay etc. Vs. M/s. Podar Cement Pvt. Ltd. etc., where it is held that the registration of documents under the Registration Act is not a must in the context of section 22 of the Income Tax Act, we hold that non-registration of transfer documents is immaterial for the purpose of invoking the provision of section 22 of the Income Tax Act.

Hence, we find that no substantial question of law arises in the present appeal and as such, the appeal is dismissed at the motion stage.