JUDGMENT [ENTITY], J.
1. In this reference under [SECTION] of the [ACT] (for short "the Act"), the following question has been referred for opinion of this court :
" Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee is entitled to depreciation on flats and buildings which have not been transferred to the assessee by the previous owner by registered deeds of conveyance ?"
2. The facts for the purpose of answering this question may be narrated as follows :
3. The assessee is a limited company having transportation business and purchased flats and office premises on ownership basis at various places in India, i.e., at Bombay, Calcutta and Poona. However, there were no registered sale deeds in favour of the assessee with regard to those flats and office premises. The assessee claimed depreciation allowance under [SECTION] 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] 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 [PRECEDENT] is clearly applicable in this case also. The assessee could very well be considered to be the owner of these flats and buildings and in consequence is entitled to depreciation under [SECTION] of the [ACT]."
4. The Revenue being dissatisfied with the decision of the Tribunal requested the Tribunal to refer the said question under [SECTION] of the Act for the opinion of this court. Hence, the present reference.
5. We have heard both parties.
6. This matter was heard at length on July 8, 1996, and the hearing was concluded on July 10, 1996. Thereafter, the matter was again listed for further hearing as certain clarifications were necessary.
7. Mr. [ENTITY], learned senior standing counsel for the Revenue/ applicant, submits before us that though the assessee purchased the flats and office premises, no deed of conveyance was registered and conveyance in respect of an immovable property without registration is invalid, therefore, the right, title and interest in respect of the aforesaid flats did not pass to the assessee and the assessee cannot be regarded as the owner. Accordingly, the assessee is not entitled to get the benefit of depreciation allowance as provided under [SECTION] of the Act. Mr. [ENTITY] further submits that the expression "owned" appearing in [SECTION] has to be strictly construed and in the absence of any registration, the assessee cannot be said to own the property.
8. Mr. [ENTITY], learned senior counsel, assisted by Dr. [ENTITY], however, supports the decision of the Tribunal.
9. [SECTION] of the [ACT] envisages that certain types of documents require compulsory registration. As per the said section any document transferring the right, title and interest of an immovable property whose value is of one hundred rupees and upwards is to be compulsorily registered. [SECTION] of [ACT] envisages that no document required by [SECTION] or by any provision of the [ACT] to be registered shall affect any immovable property comprised therein or confer any power to adopt or be received as evidence of any transaction affecting such property or conferring such power, etc. Non-registration of any such document shall not confer any right, title and interest to the transferee. A deed of sale which is required to be registered not having been registered shall not confer any right, title and interest. Prior to the pronouncement of the Privy Council in [PRECEDENT], there 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.
10. In [PRECEDENT], the Privy Council negatived a defence based on the English equitable doctrine of part performance, and their Lordships' pronouncement does not prevent the acquisition of a title by adverse possession under the statute of limitation. One thing is clear that in the absence of a registered document the right, title and interest of the immovable property shall not be conferred to the transferee. Non-registration of a document can be at best be used for collateral purpose, i.e., a purpose other than that for creating, declaring, assigning, limiting or extinguishing a right to immovable property.
11. From this point of view, the assessee cannot be said to own the property, but it is necessary now to look to the provisions of [SECTION] of the Act, whether in such a case to get the benefit of [SECTION] of the Act, the assessee must own the property. We quote the [SECTION] of the Act ;
"32. (1) In respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following deductions shall, subject to the provisions of [SECTION], be allowed . . .
(ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed ;"
12. From the reading of the aforesaid section it is abundantly clear that in order to get the benefit of depreciation allowance of a building or a property, the assessee must be the owner of the property. Therefore, the crucial question is what is the meaning of the expression "owner". According to Black's Law Dictionary, "own" means "to have a good legal title ; to hold as property ; to have a legal or rightful title to ; to have ; to possess". The meaning of "owner" as per the said dictionary is : "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 right". It is further mentioned that "the term 'owner' is used to indicate a person in whom one or more interests are vested for his own benefit. The person in whom the interests are vested, has 'title' to the interests, whether he holds them for his own benefit or for the benefit of another. Thus the term 'title' unlike 'ownership' is a colourless word ; to say without more that a person has title to certain property does not indicate 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." ' "
13. Learned counsel for the assessee has relied on the decision of the Patna High Court in [PRECEDENT], the Calcutta High Court decision in [PRECEDENT] and the Supreme Court decision in [ENTITY] (Late) v. CWT [1986] 162 ITR 888. This decision is also relied on by learned counsel for the Revenue.
14. 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 [PRECEDENT], 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 clause in the deed of transfer is very much relevant. Learned counsel for the assessee further relies on the apex court's decision in [ENTITY] (Late) v. CWT [1986] 162 ITR 888. Mr. [ENTITY], on the other hand, takes support of the said decision.
15. In [PRECEDENT] the assessee acquired certain immovable property in February, 1962, and paid the entire consideration and was also in actual physical possession of the entire properties contracted to be sold. The assessee was empowered by the vendor to use the properties in whatsoever manner the assessee liked and to receive and enjoy the entire usufructs thereof, with the only reservation that a formal deed of conveyance with registration in conformity with the [ACT] would follow at the request of the assessee and once that request was made, it was incumbent upon the transferor to execute such a deed of conveyance and to get it registered. The assessee was assessed under [SECTION] in respect of the income from the property but the Tribunal held that the assessee was not the owner of the property and was not liable to be assessed as such. The Patna High Court held that the consideration money had been paid in full and the assesses had been put in exclusive and absolute possession of the property. It had been empowered to dispose of and even alienate the property. The assessee had the right to get the conveyance duly registered and executed in its favour, but had not exercised the option. The assessee was not entitled to say that because of its own default in having a deed registered it was not the owner of the property. Therefore, the assessee must be deemed to be the owner of the property within the meaning of [SECTION] and was assessable as such on the income from the property.
16. In [PRECEDENT], the Calcutta High Court held 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 clause in the deed of transfer stated that the purpose was "to transfer by way of sub-lease". It had also been clearly indicated that what they wanted to transfer was the two-storied brick-built messuage or house and the structure situated on the "leasehold" land. This 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 [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.
17. 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 decisions are not applicable in the present facts and circumstances of the case. In the present case, the assessee purchased many buildings and office premises at various place in India, i.e., Bombay, Calcutta and Pune, however, there is no registration of formal deeds, therefore, the Calcutta decision is widely different from the present case. Here, in the instant case, the question is whether without formal registration of deeds of conveyance the assessee can be regarded as "owner".
18. The apex court in [ENTITY] (Late) v. CWT [1986] 162 ITR 888 had the occasion to consider a similar aspect of the matter in connection with a wealth-tax case under the [ACT]. While considering the expression "belonging to the assessee" as appearing in the [ACT], the apex court held that the expression "is capable of connoting interest which is less than absolute perfect legal title". In this connection, the apex court noticed the decision of the Gujarat High Court in [PRECEDENT]. The assessee, in that case, owned two properties and had agreed to sell one property to a company. The vendees had paid Rs. 30 lakhs in January, 1964, and were put in possession of the property. Thereafter, four instalments of Rs. 17.5 lakhs each were paid and the property was conveyed by four deeds executed in 1970-71 and 1972. It was contended that at the relevant time, the property did not belong to the assessee. The Gujarat High Court held that receipt of part of the sale price and parting with possession would not divest the vendor of immovable property of his title to the property. The doctrine of part performance embodied in [SECTION] of the [ACT] had limited application and afforded only a good defence to the person put in possession. The legal position and the relevant clauses of the agreement of sale showed that the assessee was the owner of the property at the relevant valuation dates. Therefore, according to the Gujarat High Court, the property agreed to be sold and which had been parted with, was includible as an asset of the assessee.
19. In some cases the phrase "belonging to" is capable of connoting interest which is less than absolute perfect legal title, as held by the apex court in [PRECEDENT]. In the said decision, the 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.
20. In [ENTITY] (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 [PRECEDENT]. 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 [PRECEDENT] 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.
21. Against the decision of the Gujarat High Court in [PRECEDENT], a special leave petition was filed by the assessee, but it was dismissed by the apex court. The Supreme Court, however, observed that dismissal of a special leave petition in limine did not clothe the decision under appeal in the special leave petition with the authority of the decision of the apex court.
22. The Punjab and Haryana High Court in the case of [PRECEDENT], while considering the meaning of "owner" under [SECTION] of the [ACT], held that the assessee occupied the property alter the execution of the agreement of sale deed in his favour and after completion of the building, he was in a position to earn income from the property sold to him, though the registered sale deed was executed subsequently, the assessee was the "owner" in terms of [SECTION] of the Act. The apex court observed that in all these decisions, including the decision of the Calcutta High Court in [PRECEDENT], the question of ownership had to be considered only in the light of the particular facts of a case.
23. Regarding the Patna High Court decision in [PRECEDENT], the apex court observed that this was concerned with the expression "owner" in [SECTION] of the Act but the apex court granted special leave to appeal against this judgment. After discussing all these decisions the apex court observed thus (at page 899 of 162 ITR) ;
". . . though all statutes including the statute in question should be equitably interpreted, there is no place for equity as such in taxation laws. The concept of reality in implementing a fiscal provision is relevant and the Legislature in this case has not significantly used the expression "owner" but used the expression "belonging to". The property in question legally, however, cannot be said to belong to the vendee. The vendee is in rightful possession only against the vendor. Speaking for myself, I have deliberated long on the question whether in interpreting the expression "belonging to" in the Act, we should not import the maxim that "equity looks upon a thing as done which ought to have been done" and though the conveyance had not been executed in favour of the vendee, and the legal title vested with the vendor, the property should be treated as belonging to the vendee and not to the assessee. I had occasion to discuss thoroughly this aspect 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 [ENTITY] has said, 'The judge, even when he be free, is not wholly free'. The judge cannot innovate at pleasure."
24. 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 an interpretation that in a situation like this, it should not be treated as belonging to the assessee but, as said before, times are not yet ripe and in spite of some hesitation, I have persuaded myself to come to the conclusion that for all legal purposes, the property must be freated as belonging to the assessee and perhaps the Legislature would remedy the hardship of the assessee in such cases if it wants. Even though the assessee had a mere husk of title and as against the vendee no reality of title, as against the world he was still the legal owner and the real owner."
25. While coming to the conclusion, the apex court in the aforesaid decision took notice of a decision rendered in [PRECEDENT], where it was observed that the property is owned by one to whom it legally belongs. The property does not legally belong to the vendee as against the vendor, the assessee.
26. After considering all the aspects of the matter, the apex court in the said decision observed that though the assessee, [ENTITY], received consideration money and possession was delivered by the vendor to the vendee, nevertheless, the ownership and title remained with the vendor, as there was no valid document of transfer. The expression "belonging to", no doubt, signifies the person holding the property without having full ownership. Even then also, the apex court held in the said case that though the expression is "belonging to" the assessee, there must be a valid transfer. The expression "owner" is a much comprehensive term which denotes the full owner as per law. Therefore, without a valid registered document, the right, title and interest would not pass to the assessee. In the present case, therefore, in our opinion, the assessee is not entitled to get the benefit under [SECTION] of the Act. Accordingly, we answer the question in the negative, i.e., in favour of the Revenue and against the assessee.
27. A copy of this judgment under the signature of the Registrar and the seal of the High Court shall be transmitted to the Income-tax Appellate Tribunal.
28. In the facts and circumstances of the case, we make no order as to costs.