TMI Blog1997 (1) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act, However, this was disallowed by the Assessing Officer, i.e., the Income-tax Officer, in view of the provisions contained in section 32 of the Act. As per the said section only the owner is entitled to get depreciation allowance. Being aggrieved, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) and the Commissioner of Income-tax (Appeals) after hearing the parties confirmed the disallowance made by the Assessing Officer. Further appeal was preferred by the assessee before the Income-tax Appellate Tribunal and the Tribunal, however, decided the issue in favour of the assessee and allowed depreciation. While deciding the issue the Tribunal observed thus : " The assessee in pursuance of the agreement purchased flats and buildings at Bombay, Calcutta and Pune, and full consideration amounts have been paid and the assessee is in exclusive possession, control of the same to the exclusion of the others and are in use. So that being the facts and circumstances, we think the ratio decidendi in the case of Madgul Udyog v. CIT is clearly applicable in this case also. The assessee could very well be considered to be the owner of these flats and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was considerable divergence of judicial opinion on the question whether an unregistered document, such as, sale deed, lease, deed of gift, etc., which was compulsorily registrable, could be received in evidence to prove the nature of the possession of the transferee. It is now settled law that though an unregistered deed of sale, mortgage, lease, gift, etc., of which registration is obligatory, cannot be relied on for the purpose of establishing the title of the vendee, mortgagee, lessee, donee, etc., yet it is admissible for the collateral purpose of explaining the nature and character of the possession of the transferee, as for instance, for the purpose of showing that the transferee has acquired a prescriptive title by adverse possession for the requisite period since the date of the transfer. But this is only for a collateral purpose. Whether a particular title is acquired by adverse possession is another question, which is not the subject-matter in the present reference. In Pir Bakhsh v. Mohomed Tahar, AIR 1934 PC 235, the Privy Council negatived a defence based on the English equitable doctrine of part performance, and their Lordships' pronouncement does not prevent the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e whether he holds such property for his own benefit or as trustee. In the earlier Act, the expression 'belonging' had been used. The dictionary meaning of the expression 'belonging' is 'that which is connected with a principal or greater thing; an appendage, an appurtenance ; also, "ownership." ' " Learned counsel for the assessee has relied on the decision of the Patna High Court in Add. CIT v. Sahay Properties and Investment Co. (P.) Ltd. [1983] 144 ITR 357, the Calcutta High Court decision in S. B. (House and Land) Pvt. Ltd. v. CIT [1979] 119 ITR 785 and the Supreme Court decision in Nawab Sir Mir Osman Ali Khan (Late) v. CWT [1986] 162 ITR 888. This decision is also relied on by learned counsel for the Revenue. Learned counsel appearing on behalf of the assessee submits before us that the expression "owner" should be understood in the context of the provisions of the Act. Learned counsel relying on the Calcutta High Court's decision in S. B. (House and Land) Pvt. Ltd. v. CIT [1979] 119 ITR 785, submits that in order to find out if the transaction of transfer of the building amounted to a sale, the real nature and essence of the transaction had to be considered. The recital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factor of intention had to be borne in mind in considering the effect of the document. The obligations and, rights as contemplated in clause 8 of the head lease had not been parted with by the deed of assignment. Similarly, the option to have renewal of the lease had not been parted with by the deed of assignment. Then again, under sub-clause (iv) of clause II of the head lease, it appeared that in case the property were acquired, then the compensation awarded would be divided between the lessor and the lessee. This would apply also in case of acquisition of the superstructure. This right to share the compensation in the event of acquisition under the Land Acquisition Act had also not been parted with in the deed of assignment. Hence, there has only been a transfer by way of sub-lease and not a sale divesting the transferor of all rights of ownership. The assessee, therefore, remained the "owner" of the property and was assessable as such. From the decisions cited above it is clear that there must be a deed of transfer and it must clearly indicate the intention of transferor that the entire right, title and interest of the property was transferred to. In our opinion, these decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e apex court observed that though the expression "belonging to" no doubt was capable of denoting an absolute title, it was nevertheless not confined to connoting that sense. Full possession of an interest less than that of full ownership could also be signified by that expression. In Nawab Sir Mir Osman Ali Khan (Late) v. CWT [1986] 162 ITR 888, the apex court further observed that there was certain aspects which had to be borne in mind. Reliance was placed on the decision of the Gujarat High Court in the case of CWT v. H. H. Maharaja F. P. Gaekwad [1983] 144 ITR 304. It was contended before the apex court that if the Gujarat High Court's view was correct, then the assessee's contention on this aspect in the instant appeal cannot be accepted. On behalf of the assessee, it was submitted that the decision of the Gujarat High Court in CWT v. Manna G. Sarabhai [1972] 86 ITR 153 not having been taken into consideration by the Gujarat High Court in the later decision, the Gujarat High Court judgment on which the Revenue relied was not correct. Against the decision of the Gujarat High Court in CWT v. H. H. Maharaja F. P. Gaekwad [1983] 144 ITR 304, a special leave petition was filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the matter with my learned brother and since in view of the position that legal title still vests with the assessee and the authorities, we have noted, are preponderantly in favour of the view that the property should be treated as belonging to the assessee in such circumstances, I shall not permit my doubts to prevail upon me to take the view that the property belongs to the vendee and not to the assessee. I am conscious that it will work some amount of injustice in such a situation because the assessees would be made liable to bear the tax burden in such situations without having the enjoyment of the property in question. But times perhaps are yet not ripe to transmute equity on this aspect in the interpretation of law--much as I would have personally liked to do that. As Benjamin Cardozo has said, 'The judge, even when he be free, is not wholly free'. The judge cannot innovate at pleasure. " The apex court further held thus (at page 900 of 162 ITR): " It may be said that the Legislature having designedly used the expression 'belonging to' and not the expression 'owned by' had perhaps expected judicial statesmanship in the interpretation of this expression as leading to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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