Deemed owners of house property (as set, 1961 Act, AY 2022-23)

The answer: yes

Section 22 taxes the annual value of a building or land appurtenant to it in the hands of its owner, leaving out any portion he occupies for his own business or profession whose profits are chargeable to income-tax. Ordinarily the owner is the legal owner. But section 27 treats certain persons as owners for sections 22 to 26 even though the legal title is not theirs, so that income cannot be shifted to someone else or escape because the title has not yet passed. Such a person is taxed under the head Income from house property as if he were the owner.

Persons treated as owners

1. Transfer to spouse or minor child (section 27(i)). An individual who gives a house to his wife (or her husband), or to a minor child who is not a married daughter, for less than adequate consideration remains its deemed owner. A transfer made as part of an arrangement for the couple to live separately is not caught.
2. Holder of an impartible estate (section 27(ii)). He is deemed the individual owner of all the properties in the estate.
3. Member of a co-operative society, company or association (section 27(iii)). A member to whom a building or part of it is allotted or leased under the house-building scheme of the society, company or association is its deemed owner, although the society holds the title.
4. Possession in part performance (section 27(iiia)). A person allowed to take or keep possession of a building, or a part of it, in part performance of a contract of the kind in section 53A of the Transfer of Property Act, 1882 is the deemed owner of that building or part, even though the sale deed is not registered.
5. Rights under a section 269UA(f) transaction (section 27(iiib)). A person who acquires rights in or over a building, or a part of it, by a transaction referred to in section 269UA(f) is the deemed owner of that building or part. Such transactions are a sale, an exchange or a lease for not less than twelve years (a lease whose term plus the further terms for which it can be extended add up to twelve years or more counts), and allowing possession in part performance of a section 53A contract; for property of the kind in section 269UA(d)(ii), anything (admission as a member, transfer of shares, an agreement or arrangement) that transfers it or enables its enjoyment. Rights by a lease from month to month or for not more than one year are excluded.

Example

Example (our own): Mr. Rao gifts a flat in Hyderabad to his wife in 2021, and she lets it for ₹25,000 a month. The rent is assessed in Mr. Rao's hands under the head Income from house property, because he is the deemed owner (section 27(i)), although the flat stands in his wife's name.