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TMI Blog1999 (2) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to depreciation allowance and additional depreciation allowance in respect of the labour houses constructed by the assessee during the previous year, on the land, conveyance deed for which was registered after the close of the previous year although the deed expressly provided that the sale was with effect from January 1, 1983 ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the directors and promoters cannot be called 'agent' and that capital borrowed from them was not borrowed for the purpose of the assessee's business because it was used for acquisition of capital assets in the form of Ledo Tea Estate ? (5) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that a part of interest was disallowable under section 40A(8) in respect of the interest paid to director and promoters on their current account ?" In relation to questions Nos. 1, 2 and 3 the facts of the matter are as follows : The assessee had purchased various assets including land, tea plants, buildings, plant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich demonstrated regular transactions during the year by way of withdrawals and deposits. In the case, certain amounts were advanced for purchase of the tea estate and no regular transactions were embodied therein. Re. Questions Nos. 1 to 3: The question as to who would be the owner of the property within the meaning of section 32 of the Income-tax Act is a vexed question. Various High Courts have held that a person who had been put in possession of the property on the basis of an agreement for sale in part performance of the contract as envisaged under section 53A of the Transfer of Property Act is not an owner in relation to the property in question. See Parthas Trust v. CIT [1988] 169 ITR 354 (Ker) [FB] ; CIT v. Draupadi Pvt. Ltd. [1995] 211 ITR 593 (Orissa) ; CIT v. Tamil Nadu Agro Industries Corporation Ltd. [1987] 163 ITR 61 (Mad) ; CIT v. Hindustan Cold Storage and Refrigeration P. Ltd. [1976] 103 ITR 455 (Delhi) and Addl. CIT v. Mercury General Corporation P. Ltd. [1982] 133 ITR 525 (Delhi). On the other hand, several High Courts have held that owner should be given a wider meaning. (See Addl. CIT v. U. P. State Agro Industrial Corporation Ltd. [1981] 127 ITR 97 (All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the owner of the property for the purposes of getting the benefit of section 32 of the said Act. The relevant portion of the said decision is being quoted below: 'We are, however, not concerned with this controversy at the present moment. It has to be borne in mind that in interpreting the liability for wealth-tax, normally equitable considerations are irrelevant. Therefore, it is not possible for us to depart from the principles laid down by the Supreme Court in R. B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570, while interpreting the meaning of the expression "owner" occurring in section 22 of the Act which is in pari materia with section 9 of the Indian Income-tax Act, 1922, for the purpose of determining the question whether the assessee is entitled to claim depreciation under section 32(1) of the Act'." The point at issue, thus, is covered by the aforementioned Division Bench decision of this court. Mr. Mallick, learned senior counsel appearing on behalf of the Revenue, however, submitted that the said decisions require reconsideration and in support of his aforementioned contention placed strong reliance on the Full Bench decision of the Kerala High Court in Parthas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same meaning has to be adhered to in all situations ? The answer to the aforementioned question must be rendered in the negative. "Owner" has been defined in the Canadian Law Dictionary, at page 271, to mean : "The person who is beneficially entitled to a right. However, the term is frequently used to denote a person who is beneficially entitled to a corporeal thing such as land chattels, goods, animals, etc. The term also has the extended meaning of denoting the person who has the dominion or control over a thing although the title to the same may be in another, such as a conditional sale's purchaser. The term also has the extended meaning of a person whose right to a thing is short of entire beneficial ownership such as a lessee for a term of years." In Black's Law Dictionary, the word "owner" has been stated to mean: "The person in whom is vested the ownership, dominion, or title of property ; proprietor. He who has dominion of a thing, real or personal, corporeal or incorporeal, which he has a right to enjoy and do with as he pleases, even to spoil or destroy it, as far as the law permits, unless he be prevented by some agreement or covenant which restrains his r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of any statute or if certain formalities as required under the statute had not been complied with, say for example, in a case where prior approval of the Government or an authority is necessary before the deed of sale is executed or similar such causes. In R. B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570, the apex court had the occasion to consider one of such questions where despite vesting of the property in custodian the same did not mean loss of ownership. In the context of section 9 of the Indian Income-tax Act, 1922, the apex court referred to Stroud's Judicial Dictionary and held that the meaning which is required to be given to the word "owner" must not be such as to make that provision capable of being made an instrument of oppression. The Patna High Court in Raja P.C. Lall Choudhary v. CIT [1948] 16 ITR 123 held a receiver not to be an owner. The apex court also referred with approval to the decision of this court in Nawab Bahadur of Murshidabad v. CIT [1955] 28 ITR 510 and Addl. CIT v. U. P. State Agro Industrial Corporation Ltd. [19811 127 ITR 97 (All) and upon considering various case law and dictionaries held that the expression "building owned by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely--a person in receipt of money having actual control over the property with no person having better right to defeat his claim of possession or a person in legal parlance who may remain a remainder man, say, at the end or extinction of the period of occupation after, again say, a thousand years ? The answer to this question in favour of the assessee would not merely be doing palpable injustice but would cause absurd inconvenience and would make the Legislature to be dubbed as being a party to a nonsensical legislation. One cannot reasonably and logically visualise as to when a person in actual physical control of the property realising the entire income and usufructs of the property for his own use and not for the use of any other person, having the absolute power of disposal of the income so received, should be held not liable to tax merely because a vestige of legal ownership or a husk of title in the long run may yet clothe another person with the power of a residual ownership when such contingency arises which is not a case even here." As regards the person in possession of the property in part performance of the contract, it was held that he would be the owner. Upon notic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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