THE COMMISSIONER OF INCOME-TAX BOMBAY ETC versus M/S PODAR CEMENT PVT.LTD.

Citation: [1997] SUPP. 1 S.C.R. 394 · Decided: 27-05-1997 · Supreme Court of India · Bench: K.S. PARIPOORNAN · Disposal: Case Partly allowed

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Judgment (excerpt)

C.I.T. BOMBA Yv. PODAR CEMENT PVT.LTD. 
395 
promoters u/s 22 of the Act and the owners of the Oats being in beneficial •A 
enjoyment of the respective properties will have to pay tax u/s 56 of the 
Act. 
The respondents submitted that the owner, the person who in his 
own right can use the house property or derive income from it, has to be 
taxed under the head 'income from house property' and that income from B 
house property cannot be taxed doubly once in the hands of the legal owner 
u/s 22 and again in the hands of actual user and recipient of income u/s 
56 of the Act as permitting such assessment would be opposed to equity 
and justice which is not normally allowed by the Courts. 
Allowing the appeal, this Court 
c 
HELD : I.I. Under the common law 'owner' means a person who has 
got valid title legally conveyed to him after complying with the require-
ments or law such as Transfer of Property Act, Registration Act etc. But 
in the context of Section 22 of the Income-Tax Act having regard to the D 
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 
recei,ve income from the property in his own right. Therefore, the 
promoters/contractors after parting with possession on receipt of full 
consideration thereby enabling the 'purchasers' to enjoy the fruits of the E 
property, even though no registered document as required u/s 54 of the 
• 
Transfer of Property Act was executed, can be 'owner' for the purpose of 
Sec. 22 of the Income Tax Act. The person in possession/enjoyment of the 
property can be considered as legal owner, and can be called upon to pay 
the tax u/s 22 of the Act. [425-D; 421-B] 
1.2. Assuming that there are two possible interpretations of Section 
22 of the Act, which is akin to a charging Section, it is well settled, that the 
one which is favourable to the assessee has to be preferred. [ 419-H; 420-A] 
F 
1.3. The amendment introduced by the Finance Bill, 1988 was declara- G 
tory/clarificatory in nature so far as it relates to Section 27 (iii), (iii) (a) and 
(iii)(b) of the Act. Consequently, these provisions are retrospective in opera-
tion. It was intended to supply an obvious omission or to clear up doubts as 
to the meaning of the word 'owner' in Section 22 of the Act. [ 425-A-C] 
Diwan Daulat Rai Kapur v. New Delhi Municipal Committee, 122 H 
396 
SUPREME COURT REPORTS [1997] SUPP. 1 S.C.R. 
A 
I.T.R. 700; C.J. T., Bombay City-Ill v. Zorostrian Building Society Ltd., 102 
ITR 499; Balkrishna Gupta & Ors. v. Swadeshi Po(ytex Ltd. & Anr., [1985) 
2 SCC 167; Narandas Karsondas v. SA. Kamtam & Anr., (1977) 2 SCR 341; 
Bai Dosabai v. Mathurdar Govinddas & Ors., [1980) 3 SCR 762; Rani 
Chhatra Kumari v. Mohan Bikram, (1931) 58 I.A. 279; R.B.R. Subba Rao & 
B Ors. v. CIT, 30 ITR 163; (Late) Nawab Sir Mir Osman Ali Khan v. Commis-
sioner of Wealth Tax, Hyderabad, 162 ITR 888 and Keshavlal Jethalal Shah 
v. Mohan/al Bhagwandas & Anr., [1968] 3 SCR 623, referred to. 
Addi. CIT v. U.P. State Agro Ind/. Corporation, 127 ITR 97 (All); Smt. 
Kala Rani v. CIT Patiala-I, 130 ITR 321 (P&H); Addi. CIT, Bihar v. Sahay 
C Properties & Investme/11 Co. (P) Ltd., 144 ITR 357 (Pat.); Saiffuddin v. CIT, 
156 ITR 127 (Raj.); Madgul Udyog v. CIT, 184 ITR 484 (Cal.); Maharani 
Yogeshwari Kumari v. CIT, 213 ITR 574 (Raj.); CITv. General Mktg. & Mfg. 
Co. Ltd., 222 ITR 574 (Cal.) and CIT v. Klishna Lal Ajmani, 222 ITR 653 
(Pat.), approved. 
D 
Sushi/ A11Sa[ v. CIT, Delhi-III, 160 ITR 308, overruled. 
R.B. Jodha Mal Kuthiala v. CIT, Pun., J&K & HP, 82 ITR 570; Mohd. 
Noor & Ors. etc. v. Mohd. Ibrahim & Ors. etc., [1994) 5 SCC 562; Keshavlal 
Jethalal Shah v. Mohan/al Bhagwandas & Anr., [1968) 3 SCR 623 and State 
E v. S.J. Choudhary, [1996) 2 sec 428, relied on. 
F 
G 
Crawford's Statutory Construction at 107; Francis Bennion Statutory 
Interpretation (2nd Edn.) 1992, 105,Justice G.P. Singh's (6th Edn.1996) and 
Principles of Statutory Interpretation, referred to. 
CIVIL APPELLATE JURISDICTION: Tax Reference Case Nos. 
9-10 of 1986. 
Arising out of l.T.A. Nos. 3390 (Born.) and 3391 (Bom.)/1981. 
Assessment Years: 1975-76 and 1976-77. 
K.N. Shukla, R. Sathish, K.N. Nagpal and Mr. B. Krishna Prasad for 
the Appellants. 
Harish N. Salve, G.C. Sharma, Sanjeev Puri, N. Ganpathy, Vinay 
Yaish, Santosh K. Agarwal, B.S. Ahuja and A. Subba Rao for the Respon-
H dents. 
C.l.T. BOMBAYv. PO DAR CEMEl\T PVT. LTD. [K VENKATASW A

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