9911796707
TMI Blog1984 (1) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... he Crown Flour Mills (for short called " the Mills "). According to the assessee, the Mills had been sold by it to its subsidiary company known as M/s. Hindustan Cold Storage and Refrigeration Pvt. Ltd. (for short called " the Company ") for a sum of Rs. 75,000, on February 1, 1957. The WTO did not agree that there had been a sale of the Mills on February 1, 1957, as contended by the assessee. The reasons for this conclusion are discussed at great length in the order of assessment to income-tax made on the assessee for the assessment year 1957-58. In that assessment, the assessee had claimed that as a result of the sale, it had incurred a loss of Rs. 3,58,783 and the loss was claimed as allowable under the provisions of s. 10(2)(vii) of the Indian I.T. Act, 1922 (for short called " the 1922 Act "). The ITO took the view that there had been no sale. He, therefore, disallowed the assessee's claim for the said loss. On the other hand, he included in the assessment of the assessee the income of Rs. 94,023 derived from the Mills in the months of February and March, 1957. This matter arising out of, the income-tax assessment eventually came to this court for its consideration in I.T.R. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a technical sense as possessing title and though the legal title to the Mills in the present case remained vested in the assessee, the Mills could not be said to belong to the assessee. The Tribunal further pointed out that the wealth-tax assessment of the assessee included not merely the value of the properties in question but also the price realised by the assessee for selling the same and this is also an additional reason for deleting the value of the Mills from the assessment under appeal. The main facts which would be necessary for the determination of the question posed for our opinion and relied on in the statement of case are those given in I.T.R. No. 22 of 1965. The assessee had been carrying two distinct businesses, namely, (1) the business of speculation in shares and other commodities, and (2) business of flour milling in its factory known as the Mills. Since for a number of years, the losses in its speculation business were wiping out the profits earned in its milling business, the assessee, decided to transfer the Mills, to its subsidiary company. A resolution was passed by the assessee on February 1, 1957, approving two draft agreements relating to the sale of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecuted. After the statement of case was read, we called upon Shri C. S. Aggarwal, counsel for the assessee, to support the view taken by the Tribunal. In addition to reiterating the arguments which found favour with the Tribunal, the counsel urges that the Mills having vested in the company for exercise of all the powers of an owner, the subsidiary company is the legal owner of the Mills even though the formal sale deed has not been executed. A half-hearted attempt was made to contend that the provisions of the T.P. Act were extended to the Union Territory of Delhi with effect from December 1, 1962, and before that there was no requirement of written sale deed and, consequently, no question of registration would arise. Suffice it to say that in the Punjab and Delhi where the T.P. Act was not extended for some time, its provisions is to matters of principle were followed as rules of justice, equity and good conscience. Even though power is conferred to exempt the sections of the T.P.Act dealing with the transactions to be effected by registered instruments, none of the States has excluded its territories from the operation of these provisions. The reason is that those provisions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases do not help the assessee in its case. What was in issue in Jodha Mal's case [1971] 82 ITR 570 (SC), was whether the persons displaced from the area now forming part of Pakistan continued to be the owners of the properties left behind by them in Pakistan within the meaning of s. 9 of the 1922 Act. The Supreme Court held, in view of the provisions of the Pakistan (Administration of Evacuee Property) Ordinance, 1949, that the property vested in the Custodian. It was a case of statutory vesting in the Custodian who got the legal little to the property. All these cases relied upon by the counsel for the assessee are on s. 22 of the Act of 1961. What is being taxed under s. 22 is the income from house property or the annual value of the property of which the assessee is the owner. The focus of the section is on the receipt of the income from house property. In the cases under W.T. Act, the net wealth is that belonging to the assessee. Liability to wealth-tax arises out of ownership of the asset and not otherwise. The property of the Mills cannot be held to be belonging to the subsidiary company without the transfer of the title by a valid sale deed. The proprietary right in the Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im for depreciation should be allowed. A reference was made to this court and the question posed was whether, on the facts and circumstances of the case, the company was entitled to claim depreciation under s. 10(2)(vi) of the 1922 Act in respect of building, machinery and plant of the Mills. This court in CIT v. Hindustan Cold Storage Refrigeration Pvt. Ltd. [1976] 103 ITR 455, held that the words " being the property of the assessee " appearing in s. 10(2)(vi) of the 1922 Act had the same meaning as the words "owned by the assessee " appearing in s. 32(1) of the 1961 Act and these words merely clarified the position that already existed under s. 10(2)(vi) of the 1922 Act. The interest which a person had in a property by virtue of s. 53A of the T.P.Act did not amount to ownership of the property. The Mills constituted immovable property of more than Rs. 100 in value and the title thereto would not pass to a party in the absence of a registered sale deed. As, admittedly, no sale deed was executed in favour of the subsidiary company during the previous year relevant to the assessment year 1958-59, the title to the Mills did not pass. The Mills was not the property of the subsidiar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
