TMI Blog1985 (11) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... se to that firm by the Government of Rajasthan. According to that agreement, the assessee has to pay Rs. 50,000 in cash, clear off a cash credit arrangement with the State Bank of Bikaner and Jaipur to the extent of Rs. 1 lakh and out of the balance amount 50 per cent should be paid within 2 months from the date of settlement of a civil suit in which the vendor firm was involved. The second instalment will be paid at the time of registration of sale deed. The assessee had paid according to the stipulations. We were told that the civil suit mentioned in the agreement of sale had not yet been finalised and, therefore, that part of the instalment remains to be paid. No registration of the sale deed has been effected so far. 3. The assessee was given possession of the building, plant and machinery. The assessee had also written to the Government of Rajasthan with regard to their lease of the land on which the building is situated. The Government of Rajasthan by their order had recognised the assessee as the lessee in place of the Bharatpur firm. 4. From the assessment year 1975-76 onwards, the assessee claimed depreciation in respect of the factory buildings and other assets at Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven if this amount is forfeited. The assessee would have the benefit of using the assets and therefore, the amount forfeited would be in the nature of interest and rent paid for the assets. 7. We are unable to consider the agreement as a financing agreement or a hiring agreement. The agreement is clearly an agreement for sale. The assets to be transferred are mentioned therein in a Schedule. Full consideration had been paid. As stipulated therein, the Government of Rajasthan had been approached and they have recognised the assessee as the lessee. The assessee had taken possession and had used the properties for all these years. On these facts, it will be very difficult to say that the agreement was merely a financial accommodation. Too much cannot be read in clause 4 of the agreement. It cannot in any way be treated as an agreement for rental of the premises and the assets. In all agreements, there would be certain conditions on the breach of which either party could resile from the contract. These are usual conditions found in any sale agreement and it has no further significance. We, therefore, do not consider it in any other light as suggested by the department. 8. We also r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int, the authorities are unanimous that the interpretation in respect of the expression 'ownership' appearing in sections 22 and 32 should be identical. It is interesting to note that the two decisions relied on by the assessee on the one hand and the department on the other start from this common premise that for the purpose of sections 32 and 22 ownership of properties is vital. In the case of CIT v. Hindustan Cold Storage Refrigeration (P.) Ltd. [1976] 103 ITR 455, a case relied on by the department, the Delhi High Court, proceeding on the footing that there is no difference, held that where conveyance deed has not been registered, there is no transfer of ownership in the case of immovable properties. The Allahabad High Court in the case relied on by the assessee observed at page 101 : "In our opinion, the scope of the expressions 'property of which the assessee is owner', used in section 9 of the 1922 Act and 'the property owned by the assessee' used in section 32 of the 1961 Act, is the same." It will be seen from the above that the case laws applicable in respect of ownership of property under the head 'Income from house property' would be equally applicable in considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt held that the assessee had exercised all the rights of an owner and, therefore, was entitled to be considered as an owner for the purpose of section 32. 14. In the course of the judgment, they had referred to the decision of the Delhi High Court in the case of Hindustan Cold Storage Refrigeration (P.) Ltd. They distinguished that case by stating that the attention of the Delhi High Court had not been invited to the decision of the Supreme Court in R.B. Jodha Mal Kuthiala's case. 15. It would, therefore, appear that the decision of the Allahabad High Court has eroded into the concept that title to immovable property vests only on registration of the conveyance deed. So, the question is whether we have to consider that in respect of an immovable property registration of the deed is necessary before depreciation under section 32 can be allowed. In other words, the question is whether the law as laid down by the Supreme Court that such registration is necessary in the case of CIT v. Bhurangya Coal Co. [1958] 34 ITR 802, the Calcutta High Court decision in the case of CIT v. Ganga Properties Ltd. [1970] 77 ITR 637 and Ram Gopal Reddy v. Addl. Custodian Evacuee Property AIR 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or us to divorce a test of mere receipt of income apart from vesting of the property under the Evacuee Ordinance. None of the decisions on which reliance is placed by Mr. Joshi was cited before the Supreme Court and there is nothing in the findings of the Supreme Court which will persuade us to take the view that the said decisions should be treated as impliedly overruled. The case before the Supreme Court has not been decided upon the mere fact of having possession and the right to receive income. The entire provisions of the Evacuee Ordinance have been considered and it is after scrutiny of the provisions of the said Ordinance that the view has been taken that an evacuee assessee cannot be regarded as 'owner' within the meaning of section 9." It will be seen from the above that the Bombay High Court is of a very firm opinion that the earlier rulings on this point still hold the field. 16. It may be argued that there is a difference in the approach of the Allahabad High Court and the Bombay High Court and it is not necessary for us to follow the Bombay High Court's views. In this connection, we would refer to the decision of the Andhra Pradesh High Court, because their decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We can only give a finding that the title to the building has not been transferred to the assessee and so depreciation in respect of the building cannot be allowed. But, still, the question would be whether the assessee would be entitled to depreciation in respect of plant and machinery, office equipment and furniture. In respect of these assets, we are of opinion that the assessee would be entitled to depreciation. There could be no difficulty with regard to office equipment and furniture. They are movable properties. In movable properties, title passes on possession being given. It is not disputed that the assessee was given possession. So, the assessee is entitled to depreciation in respect of these two assets. 18. In respect of plant and machinery, there are two possibilities. If the plant and machinery are such that they have necessarily to be embedded in the earth, then they will take the character of immovable property. If they are not embedded in the earth, they will be considered as movable property. Since possession has been given, the assessee would be considered as the owner. For this purpose, a finding has to be given whether the plant and machinery are embedded in e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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