Sujata V. Manohar, J.
1. The assessees in the present case are Mumbadevi Mansion Co-owners Housing Co-operative Private Ltd., Bombay. The case refers to the assessment years from 1963-64 to 1966-67. The dispute is in respect of a plot of land bearing City Survey No. 1345 of Bhuleshwar Division and a new building which is constructed on it.
2. One Talakchand Uttamchand Zaveri and his sons and other family members were the owners of the said plot of land together with the structure which was then standing on it. On January 10, 1952, Talakchand Uttamchand Zaveri and the other co-owners entered into an agreement with one Mulchand Hukmatrai whereunder they leased out the said property to Mulchand Hukmatrai for a period of 99 years on a monthly rent of Rs. 1,101. Mulchand Hukmatrai was to get the building then standing on the said plot vacated by the tenants, to demolish it and then to construct one or more buildings in its place at his cost. Pursuant to this agreement, Mulchand Hukmatrai got the said structure vacated by the tenants, demolished the structure and built the existing structure. The building consists of a number of flats. The flats were purchased by a number of persons under agreements which they entered into with Mulchand. The said building was duly completed and flats were occupied by their various prospective purchasers. In the meanwhile, Mulchand committed defaults in the payment of the lease rent to his lessors. The lessors instituted a suit in the Bombay High Court, being Suit No. 356 of 1955, in respect of the said defaults. During the pendency of the suit Mulchand died in the year 1957 and his legal representatives were brought on record. A consent decree dated February 28, 1965, was passed in the suit whereunder the legal representatives of Mulchand surrendered their rights under the original lease deed between Mulchand and his lessors as also in respect of the building constructed by him thereon in favour of the lessors, that is to say, the Zaveris, so as to enable the latter to grant a lease of the said land together with the building standing thereon to an incorporated body to be formed by the occupiers of the said premises on the terms and conditions mentioned therein.
3. After the consent decree, an agreement of lease was entered into between the Zaveris and the assessee-company on the terms and conditions contained in an indenture dated December 12, 1961. Pursuant to this indenture the assessees are in possession of the said plot of land and the building standing thereon.
4. According to the applicant, the Commissioner of Income-tax, the assessees are the owners of the said land and building. The assessees have contended that they are only lessees in respect of the said land and building. According to the ITO, the assessees were owners of the said property and they were liable to pay income-tax under the provisions of s. 22 of the I.T. Act, 1961, on the suit property for the relevant assessment years. The AAC, in appeal, held that the assessees were only lessees of the property in question and they could not be assessed under s. 22 of the I.T. Act, 1961. The Revenue then appealed to the Income-tax Tribunal, which, however, upheld the conclusion of the Appellate Assistant Commissioner.
5. At the instance of the Revenue, the following questions have been referred to us for our opinion :
'(1) Whether, on the facts and in the circumstances of the case, the assessee is the owner and not the lessee of the building in question ?'
6. If question No. 1 above is answered in the affirmative,
'(2) Whether the annual letting out value of that property was 'nil' and as such the assessee was not liable to pay income-tax under section 22 of the Income-tax Act, 1961, for the assessment years 1963-64 to 1967-68 ?'
7. If question No. 1 is answered in the negative,
'(3) Whether, on the facts and in the circumstances of the case, the assessee is liable to pay income-tax under section 22 of the Income-tax Act, 1961, for the assessment years 1963-64 to 1967-68 ?'
8. In order to determine the right, title, and interest of the assessee-company in the building in dispute, it is necessary to examine the agreement dated December 12, 1961, because this is the only agreement under which the assessees derive their title to the suit property. In this agreement dated December 12, 1961, it is provided that 'in view of the agreement and in consideration of the premises and in consideration of the rents, convenants, conditions and agreements thereafter reserved and contained on the part of the lessee to be paid, performed and observed, the Zaveris at the request and direction of the assessee do and each of them doth thereby grant to the assessee as lessees the lease of the land in question together with the building standing thereon for a period of 99 years effective from December 1, 1961, on a monthly rent of Rs. 1,101'. It further provides that the assessees were to pay to Zaveris a sum of Rs. 2,202, being the equivalent amount of two months' rent as permanent advance payment. From these provisions in the indenture dated December 15, 1961, it is quite clear that the legal relationship between the Zaveris and the assessees is a relationship of lessors and lessees.
9. Mr. Naik, learned counsel for the Revenue, submitted that originally Mulchand was the owner of the building. He relied upon the observations made by the Calcutta High Court in the case of Ballygunge Bank Ltd. v. CIT  14 ITR 409, to the effect that in India it is possible to have a distinct ownership of land and building standing on it. He further submitted that Mulchand, though he was a lessee in respect of the land, was the owner of the building. The assessee-company, which is constituted by persons who have entered into agreements with Mulchand, should also be considered as the owner of the building in succession to Mulchand. This submission of Mr. Naik is contrary to the agreements which have been arrived at between the parties concerned as well as the consent terms which were filed in Suit No. 356 of 1955 filed in this High Court. It is true that Mulchand was originally the lessee of the land and owner of the building. Under the consent decree, however, the legal representatives of Mulchand surrendered their right, title and interest as lessees of the land and as owners of the building in favour of the Zaveris. The Zaveris, in turn, gave a lease of the land and building to the assessees under the indenture dated December 12, 1961. It is, therefore, not possible to accept the contention of Mr. Naik that by virtue of the agreements entered into by the prospective purchasers of flats in the building with Mulchand, the assessees have become the owners.
10. Mr. Naik also drew our attention to the objects for which the assessees were incorporated. One such object was to acquire land and building in the city of Bombay, to build buildings on such plot and to own land and manage such property for the benefit of the shareholders. It is difficult to see how such an object clause can make the assessees owners of the building in dispute when the indenture dated December 12, 1961, under which they derived their title creates only a lease in their favour. It may also be noted that another object clause enables the assessees to take on lease or otherwise acquire the suit property.
11. If the assessees are not the owners of the building, there can be no question of their being assessed under the provisions of s. 22 of the I.T. Act, 1961.
12. In the premises, the questions are answered as follows :
Question No. 1 : In the negative.
Question No. 2 : Does not arise in view of our finding that the assessees are not the owners of the building in question.
Question No. 3 : In the negative.
Hence, question Nos. 1 and 3 are both answered in favour of the assessees.
13. The applicant to pay to the respondents the costs of the reference.