FACTS
Podar Cement i.e. Respondent in the present case is a company and the assessee for the purposes of Income Tax Act, 1961. Malabar Industries P. Ltd. Are the builders and they constructed a building named “Silver Arch” on the Nepeansena Road, Bombay. Podar Cement owns four flats i.e. flat no. 231, 232, 241 and 242 in the building “Silver Arch” constructed by the Malabar Industries. Out of all the four flats which are mentioned before, two of them were directly purchased by the Podar Cement Ltd. And the remaining two were purchased by the sister concern of the Podar Cement and thus, consequently by the Podar Cement. In August, the full consideration for the four flats was paid to the builders by the Podar Cement Ltd. After the consideration was paid, then the possession of the flats was taken by the Podar Cement Ltd. After taking the possession of the flats from the builders, Podar Cement Ltd. gave those flats on rent to the various other persons. The assessment year 1975-76 and 1976-77 are in question in the present case. The rental income i.e. the rent collected by letting out these flats was included in the return of these assessment years.…show more content… included this rental income from the flats as assessable as ‘Income from other sources’ under Section 56 of Income Tax Act, 1961. The reason for the same stated by the Podar Cement Ltd. was that they were not the legal owner of the flats. This is because as the title of the property had not been transferred to Co-operative Societies which was made by the Podar Cement Ltd. and thus the ownership was not transferred in the name of Podar Cement Ltd. and thus, the rental income from the flats cannot be ‘Income from House Property’ under Section 22 of the Income Taxt Act, 1961 as they only have possession of the flats and not the