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TMI Blog2016 (12) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... tenure of the lease was three years, renewable at the option of the assessee by another three years. Concededly, the document was unregistered. The assessee paid a security deposit of Rs. 3.16 crores, and in addition, agreed to pay rent at Rs. 5 per sq. ft. of the premises leased. The subsequent agreement dated 17.04.1993 recorded that the parties had entered into a lease arrangement, and that the assessee had the option to purchase the leased property on expiry of three years from the commencement of the lease i.e. within three years from the date it entered into possession of the premises upon payment of Rs. 3.36 crores. The agreement expressly recorded that Rs. 3.16 crores paid as security deposit is adjustable and the balance alone would have to be paid by the assessee in the event of it exercising option. In the event it chose not to exercise the option that amount would become refundable. The assessee claimed depreciation under Section 32(1) of the Income Tax Act, 1961 (in short the Act) contending that the improvements made and the cost of acquisition is depreciable. 3. In the assessment the Assessing Officer (AO) rejected the assessee's claim after noticing the relevant f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n whom the title vests but not in his own right. In the instant case, the appellant cannot exercise right of ownership such as (a) the power of enjoyment, i.e., the power to deal with the produce as he pleases and the power to destroy, (b) possession which includes the right to exclude others, (c) power to alienate inter vivos or to charge as security and (d) power to dispose off the property by Will. Thus I am of the view that one of the most important of these powers is the right to exclude others and in the instant case the appellant doss not have the right to exclude others because the appellant has not become the absolute owner of the property. Besides, the appellant also does not have the power to dispose off the property by will and is simply in the precious possession of the property for the beneficial use and it has been categorically stated by their Lordships in the judgment enumerated in the preceding paras that mere possessor of the property without exercising right of ownership cannot be termed as the owner of the property in the context of the phraseology used in Sec. 32(1) of the Act. Thus, the case laws relied upon by the Ld. counsel, in my opinion, will not bailout ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concept of ownership is relevant in the case of immovable property only because in the case of transfer of immovable property, a registered deed is must if the valuation exceeds more than Rs. 100/-, both u/s 17 and 49 of the Indian Registration Act. In my opinion, the Hon'ble bench impliedly concluded that in the case of immovable property for becoming the owner for the purpose of Sec. 32(1) of the Act, legal right to the property was a must and the claimant of the depreciation must be one with much more than more threads of rights...." 5. The Income Tax Appellate Tribunal (in short the Tribunal), which delivered the impugned judgment, reversed the reasoning of the authorities below taking note of the Supreme Court judgment in CIT vs. Podar Cement (P) Ltd. (1997) 226 ITR 625. Apart from noticing the ratio in Podar Cement (supra), the Tribunal also held that non-registration of the agreement did not imply that the benefit otherwise available under Section 53A of the Transfer of Property Act, 1882 (in short TP Act) of being entitled to continue in possession in part performance of an agreement to sell, had to be denied. 6. Mr. Rahul Chaudhury, the learned counsel arguing on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed- xxxx xxxx Explanation 1.-Where the business or profession of the assessee is carried on in a building not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee....." 8. In the present case the assessee claimed depreciation for AY 1994-95 urging that it had paid a sum of Rs. 3.16 crores. The AO rejected the claim as is evident from the preceding discussion and a reading of his order would reveal that he confined hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "The question is who is the "owner" referred to in this Section? Is it the person in whom the property vests or is it he who is entitled to some beneficial interest in the property? It must be remembered that Section 9 brings to tax the income from property and not the interest of a person in the property. A property cannot be owned by two persons, each one having independent and exclusive right over it. Hence, for the purpose of Section 9, the owner must be that person who can exercise the rights of the owner, not on behalf of the owner but in his own right." 24. The learned Judge observed that "it is true that equitable considerations are irrelevant in interpreting tax laws. But, those laws, like all other laws, have to be interpreted reasonably and in consonance with justice". Again at page 577, it was held that "for determining the person liable to pay tax, the test laid down by the Court was to find out the person entitled to that income". Again at page 578 it was observed: "No one denies that an evacuee from Pakistan has a residual right in the property that he left in Pakistan. But the real question is, can that right be considered as ownership within the meaning of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered deed conveying the property, the person in possession/enjoyment of the property cannot be considered as legal owner and, therefore, he cannot be called upon to pay the tax under Section 22 of the Act. 35. The law laid down by this Court in Jodha Mal's case according to us, has been rightly understood by the High Courts of Punjab and Haryana, Patna, Rajasthan, etc. The requirement of registration of the sale-deed in the context of the Section 22is not warranted...." 11. The effect of the ruling in Podar Cement (supra) was considered again in Mysore Minerals Ltd. vs CIT (1999) 239 ITR 775 (SC) in the context of Section 32 of the Act itself. The Court declared the law as follows: "....14. It is well-settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the Legislature in enacting Section 32 of the Act would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purposes of his business or profession. Assigning any different meaning would ..... 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