TMI Blog2016 (12) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... n part payment to those who have booked. Possession is also delivered to the allottee so as to enable enjoyment of the property. Execution of documents transferring title necessarily follows if the schedule of payment is observed by the allottee. If only the allottee may default the property may revert back to the Board. That is a matter only between the Housing Board and the allottee. No third person intervenes. The part payments made by allottee are with the intention of acquiring title. The delivery of possession by the Housing Board to the allottee is also a step towards conferring ownership. Documentation is delayed only with the idea of compelling the allottee to observe the schedule of payment.- Decided against revenue. - ITA 314/2003 - - - Dated:- 1-12-2016 - MR. S. RAVINDRA BHAT MR. NAJMI WAZIRI JJ. Appellant Through: Mr. Rahul Chaudhary Mr. Raghvendra Singh, Advs. Respondent Through: Ms. Kavita Jha, Ms. Roopali Gupta and Mr. Bhuwan Dhoopar, Advs. S. RAVINDRA BHAT, J (Oral) 1. The question of law framed in this appeal is as follows: Whether the ITAT was correct in law in holding that the respondent-assessee is entitled to depreciation under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Corporation (P) Ltd. (133 ITR 525-Delhi) CIT Vs. T.N.Agro Industries Ltd. (163 ITR 61 - Madras). Thus, for recognising a transfer of title to an immovable property valuing ₹ 100/- and upward, a document in writing and duly registered is needed. In the absence of a registered deed conveying the ownership of the property, an assessee cannot be regarded as owner of that property ( Kalpana Tourist Pvt. Ltd. Vs. CIT-172 ITR-364 Kerala and Parthas Trust Vs. CIT-169 ITR 334-Kerala Full Bench ). The argument of the appellant that the term transfer u/s 2(47) has been amended to taken within its ambit even cases of possession u/s 53A of the Income-Tax Act is not of any avail because the term 'Ownership' appearing in section 32 has nothing to do with the definition of a 'Transfer' a/s 2 (47) which was introduced to rope in escaping capital gains under these circumstances. Secondly the assessee in this case is only a lessee and not owner at all. 4.3 In view of this background, depreciation of office building cannot be allowed. This position has been accepted by learned CIT(Appeals)-I, New Delhi vide his order dated 28-12-1995 in the case of M/s Freesia Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of its being allowed in a case, where the appellant is not even a fractional owner of the said property. The appellant, on the other hand, in this case has been paying rent to the transferor of the property which has not been assigned to the appellant legally. It will not be out of place to make a mention of the case of Parthas Trust (supra) again wherein the full bench of Kerala High Court have exacted the complete look into all the decisions even that of Supreme Court in the case of R.B. Jodha Mal Kuthiala vs. CIT, 82 ITR 570 and have come to a finding that the depreciation would be allowable only to the legal owner of the property and not to the fractional or beneficial owner. Their Lordships in the said case of Kerala High Court also observed that Supreme Court in the case of R.B. Jodha Mal Kuthiala (supra) essentially dealt with the effect and impact of the Pakistan Evacuee Property Vesting Act and hence the said decision has to be understood in that context only. 5.3 I would be failing in my duty if do not make a mention of the recent decision of the I.T.A.T., Delhi Bench 'A' decided on March 11, 1996 in the case of ACIT vs Chadha Wine Store Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction upon the premises leased would qualify for depreciation and nothing else. The learned counsel also relied upon the ruling of this Court in Commissioner of Income Tax vs Hindustan Cold Storage and Refrigeration P. Ltd. (1976) 103 ITR 455. It was urged that the decision also took note of Section 53A of the TP Act and its legal effect, and relied upon previous rulings of the Supreme Court and Privy Council. 7. The learned counsel for the respondent/ assessee urged that the lease deed of 16.04.1993 cannot be read in isolation and has to be conjointly considered with the agreement to sell dated 17.04.1993. So considered, the parties intention clearly was to show the transaction as a lease but with condition that the property would be ultimately purchased by the assessee. To that end, substantial part of the consideration agreed, for the sale itself had been paid when the lease deed was entered into by way of a security deposit. Clause (1) and (2) of the agreement dated 17.04.1993 in fact recognized that the security deposit would be adjusted towards the total consideration and a small balance of ₹ 20 lacs was payable when the sale deed was executed. Given these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sum of ₹ 3.16 crores could not have been derived. The CIT(A) too proceeded on a similar tangent. At the same time we also notice that the AO did consider the effect of the ruling of this Court in Hindustan Cold Storage (supra) which appears to have some background on what was then perceived to be the correct interpretation of Section 53A. The Tribunal, however, had the benefit of the ruling of the Supreme Court in Podar Cement (supra). 9. To rewind a bit, the AO s order was made on 30.08.1996. The decision in Podar Cement (supra) was delivered on 27.05.1997. Podar Cement (supra) examined various decisions of the High Courts; one set of High Courts holding that the benefits under Section 53A of the TP Act could be considered for the purposes of income tax and permissibility of depreciation, whereas the other set of High Courts had held otherwise. The relevant discussion in Podar Cement (supra) is as follows: ....23 We have noticed the reliance placed by the bar on the decision of this Court in Jodha Mal's case which was concerned with the old Section 9(i) of the Act. In that case, this Court had occasioned to consider the meaning to be given to the words 'o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixes the liability on a person who receives - or is entitled to receive the income from the property in his own right. In spite of this, the assessing officers of various circles instead of uniformally following the ratio laid down in this case have taken different diametrically opposite views depending upon the pronouncements of the concerned High Courts in the circles on the scope of Section 22 of the Act. The High Courts of Allahabad. Punjab and Haryana, Rajasthan, Calcutta and Patna have taken the view by correctly understanding the ratio laid down in Jodha Mal's case and the High Courts of Bombay, Delhi and Andhra Pradesh have taken a different view wrongly distinguishing on facts in Jodha Mal's case. 26. In the Kala Rani's case (supra), the Punjab and Haryana High Court after referring to the judgment of this Court in Jodha Mal's case observed as follows: Thus, it cannot be accepted that before a person can be assessed under Section 22 of the Act, he must be the owner by virtue of a sale deed in his favour. As a matter of fact, what is being taxed under Section 22 of the Act is the income from house property or the annual value of the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the legal owner it was not using the building for its business or profession. We do not think such a benefit-to-none situation could have been intended by the Legislature. The finding of fact arrived at in the case at hand' is that though a document of title was not executed by the Housing Board in favour of the assessee, but the houses were allotted to the assessee by the Housing Board, part payment received and possession delivered so as to confer dominion over the property on the assessee whereafter the assessee had in its own right allotted the quarters to the staff and they were being actually used by the staff of the assessee. It is common knowledge, under the various schemes floated by bodies like housing boards, houses are constructed on a large scale and allotted on part payment to those who have booked. Possession is also delivered to the allottee so as to enable enjoyment of the property. Execution of documents transferring title necessarily follows if the schedule of payment is observed by the allottee. If only the allottee may default the property may revert back to the Board. That is a matter only between the Housing Board and the allottee. No third person int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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