269ua

A PERSON WHO HAS ACQUIRED A RIGHT IN A BUILDING UNDER SECTION 269 UA(f) - If a person acquires a right in a building by virtue of a transaction which is referred to in section 269 UA (f), then he is deemed as owner of the property.

Broadly speaking, section 269 UA (f) covers giving a property on lease for a term of not less than 12 years (whether fixed originally or there is a provision for extension of term and the aggregate period is not less than 12 years). The above-noted provision of deemed ownership does not cover any right by way of a lease from month to month or for a period not exceeding one year.

From the provisions of section 27(iiib) read with section 269UA(f) it is clear that where the period of lease is more than 12 years, lessee is deemed to be the owner of the property for purpose of assessment— Yagyawati Jayaswal Family Trust v. ITO [2004] 89 ITD 199 (Kol.)(SMC).

The following illustrations are given to have better understanding—

1. X owns a property. It is given on lease for a period of 12 years to Y, lease rent being Rs. 40,000 per month. As the period of lease is not less than 12 years, Y becomes deemed “owner” of the property.

2. A owns a property. It is given on lease for a period of 6 years to B, lease rent being Rs. 20,000 per month. B has a right to get renewal of lease for further period of 6 years after the expiry of lease. In this case, the aggregate period of lease is not less than 12 years. Therefore, B is deemed as “owner” of the property.

3. C owns a property, which is given on lease to D for a period of one month, rent being Rs. 10,000. D has a right to get renewal of the lease subject to the condition that every time it will be renewed only for a period of one month and such renewal is possible with mutual consent till 2050. In this case, the aggregate period of lease is more than 12 years, but D will not become deemed “owner” of the property (the property is given on lease from month to month).