Per Shri T. Venkatappa, Judicial Member - The assessee purchased two lorries from Arun Transports, Bangalore on 19-10-1975. These two lorries, viz., MYT 3575 and MYT 3576 were not registered in the assessees name till the end of the accounting period which ended on 30-9-1977. The assessee claimed depreciation on the said two lorries.
The ITO did not allow depreciation on the ground that the lorries did not stand registered in the assessees name during the accounting year.
On appeal, the Commissioner (Appeals) upheld the same.
2. The learned counsel for the assessee submitted that the lorries were delivered to the assessee on 19-10-1975 and they were run by the assessee during this year. The assessee has been the owner of the lorries. Merely because they were not registered under the Motor Vehicle Act in the assessees name during this year it cannot be held that the assessee is not the owner. Thus, he urged that the claim for depreciation should have been allowed in respect of the two lorries owned by the assessee. The learned departmental representative submitted that under section 32 of the Income-tax Act, 1961 (the Act), unless the asset is owned by the assessee and used for the purpose of business depreciation cannot be allowed. The lorries run by the assessee have not been registered in its name during this year. Hence, the claim for depreciation has been rightly disallowed.
3. We have considered the rival submissions. The assessee has purchased two lorries from Arun Transports and delivery of those lorries was handed over to the assessee on 19-10-1975. Since then the assessee has been running the lorries. The assessee claimed depreciation under section 32 in respect of the said two lorries. Section 32(1) states "in respect of depreciation of building, machinery, plant or furniture owned by the assessee and used for the purpose of the business or profession, the following deductions shall, subject to the provisions of section 34, be allowed. . ." There is no dispute that the lorries have been used for the purpose of the business of the assessee. The only question is whether it could be said that the assessee owned the lorries in order to claim depreciation under section 32. In our view, the assessee after purchasing the lorries by making the payment of the price and taking the delivery of the same on 19-10-1975 became the owner of the two lorries.
4. In the case of sale of movable properties no registered deed is required. All that is required is there must be a transfer of property from seller to buyer, in consideration of payment of money or a promise thereof by the buyer and there should be delivery of possession. The essence of sale is that the property should pass from the seller to the buyer under a contract sale. In CIT v. Bhurangya Coal Co.  34 ITR 802 the Supreme Court held that the title to movable property passed on the day they were handed over. In K. L. Johar & Co. v. Dy. CTO  16 STC 213, the Supreme Court held that the essence of a sale under the Sale of Goods Act is that the property should pass from the seller to the buyer when a contract of sale is made except in a case of conditional sale. It was further observed as under : ". . . So far as the dealer is concerned the whole price is paid by the appellant. The agreement also shows that the appellant is the owner of the vehicle and the intending purchaser is merely a hirer thereunder.
The vehicle has to be registered in the name of the appellant, though the fact of registration by itself in one name or another may not be determinative of the ownership of the vehicle. . . ." (p. 223) Thus, it is stated therein that the fact of registration by itself in one name or another may not be determinative of the ownership of the vehicle. The ratio laid down in the above cases squarely applies to the instant case. In the instant case the ownership of the two lorries has passed from seller to buyer on payment of price under contract of sale and of possession of the lorries having been given to the buyer. Thus, the assessee has become the owner of the lorries. The registration by itself does not determine the ownership of the vehicle.
5. Let us also Examine the provisions of the Motor Vehicles Act, 1939.
Section 2(19) defines owner as under : "owner means, where the person in possession of a motor vehicle is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase agreement, the person in possession of the vehicle under that agreement;" The above definition is not an exhaustive one. It indicates that a person in possession could be deemed as owner. Section 22 of the said Act deals with the necessity for registration. It reads as under : "22. Necessity for registration. - (1) No person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place for the purpose of carrying passengers or goods unless the vehicle is registered in accordance with this Chapter and the certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner." Section 31 of the said Act, deals with transfer of ownership. It is clear from section 22 that the necessity for registration is only for the purpose of driving the vehicle in any public place or any other place for purposes of carrying passengers or goods. Section 22 does not lay down that a person cannot be the owner of motor vehicle unless it is registered in his name. Registration is not an essential pre-requisite for acquisition of ownership of motor vehicle. Section 31 only deals with the intimation to be given to the registering authority by the transferor and the transferee when the ownership of any motor vehicle is transferred. In Murthyasami Gounder v. Thulasi Ammal  1 Mad. LJ 263, it was held that are ading of section 31 shows that the contractual transfer of ownership of a vehicle has to precede the application for transfer of ownership but as between the transferor and the transferee the sale gets completed before the transfer of registration certificate. This decision was followed by the Andhra Pradesh High Court in M. J. Velu Mudaliar v. Sri Venkateswara Finance Corpn. AIR 1971 AP 63. It was held by the Andhra Pradesh High Court that all that section 31 requires is that after transfer, the authorities concerned must be notified about the change of ownership.
If there is omission in that regard certain penalties are indicated.
The omission to notify the change of ownership does not make the transfer itself illegal.
6. Section 32 of the Income-tax Act does not require that the assessee must be a registered owner of the lorries under the Motor Vehicles Act in order to claim depreciation allowance. It only states that it should be owned by the assessee. The assessee having purchased the lorries and having taken delivery of the same and running the same for its business, it cannot be said that the lorries are not owned by the assessee for the purpose of claiming depreciation under section 32. As between the transferor and the transferee sale gets completed irrespective of its registration under the Motor Vehicles Act. The omission to get it registered does not make the transfer itself illegal. In our view, it is not material whether the lorries are registered in the assessees name or not under the Motor Vehicle Act for the purpose of claiming depreciation under section 32 once there is evidence to prove that he owned the lorries. We have already held that the assessee owned the lorries having purchased and taken delivery on 19-10-1975. Thus, in our view, the assessee is entitled for depreciation under section 32 on the two lorries.
7. In CIT v. Salkia Transport Associates  143 ITR 39, the Calcutta High Court held that there is no provision under the Motor Vehicle Act which requires registration of motor vehicles in the name of the person for the purpose of acquisition of ownership of the vehicle. Section 22(1) does not prevent a person from becoming a owner of the vehicle without registration. Registration is not an essential pre-requisite for acquisition of ownership of motor vehicle but is an obligation cast upon the owner of a vehicle for the purpose of running of the vehicle in any public place. Thus, it was held that the buses were owned by the assessee within the meaning of section 32 though they were not registered in its name, under the Motor Vehicle Act, and the assessee was entitled to depreciation allowance on those vehicles.
8. In Addl. CIT v. U.P. State Agro Industrial Corpn. Ltd.  127 ITR 97 (All.), the ITO disallowed the depreciation claimed by the Agro Corporation on the ground that it did not become the owner as no sale deed has been executed by the State Government. The AAC upheld the same. The Tribunal held that it was entitled to depreciation. The matter was carried in reference. The Allahabad High Court held that after putting the Agro Corporation into possession of the properties in pursuance of the agreement to convey title therein, the State Government is, under section 53A of the Transfer of Property Act, 1882, debarred from exercising the rights of an owner in respect thereof and it cannot, any more, be considered to be an owner of those properties even though real title in the property continued to be vested in it and the only person who can be said to own the properties is the Agro Corporation which, as a result of agreement of sell, has been put in possession of the properties. Thus, it was held that the Agro Corporation was entitled for depreciation under section 32. The ratio laid down in the above cases squarely apply.
9. In R. B. Jodha Mal Kuthiala v. CIT  82 ITR 570, the Supreme Court observed as under : ". . . But the real question is, can that right be considered as ownership within the meaning of section 9 of the Act. As mentioned earlier that section seeks to bring to tax income of the property in the hands of the owner. Hence, the focus of that section is on the receipt of the income. The word owner has different meaning in different contexts. Under certain circumstances a lessee may be considered as the owner of the property leased to him. In Strouds Judicial Dictionary, 3rd edition, various meaning of the word owner are given. It is not necessary for our present purpose to examine the word owner means in different contexts. The meaning that we give to the word owner in section 9 must not be such as to make the provision capable of being made an instrument of oppression. It must be in consonance with the principles underlying the Act." (p. 578) Thus, it was observed therein that under certain circumstances, a lessee may be considered as the owner of the property leased to him. In that case, it was held that the assessee whose property vested in the custodian of the evacuee property is not the owner of the property.
10. The revenue relied on a decision of the Delhi High Court in the case of CIT v. Hindustan Cold Storage & Refrigeration (P.) Ltd.  103 ITR 455 wherein it was held that as the sale deed was not executed in favour of the assessee-company the title to the property did not pass to it and the assessee was not entitled to depreciation. The above decision was a case of immovable property and so, the title would not pass in the absence of a registered sale deed. It is on those facts it was held that the assessee was not entitled to depreciation. This decision was noticed by the Allahabad High Court in the above case. It was pointed out that the decision of the Supreme Court in R. B. Jodha Mal Kuthialas case (supra) was not noticed by the Delhi High Court.
11. It is well settled that when there are two views, the view favourable to the assessee should be accepted. In this connection, we may refer to the decision of the Supreme Court in the case of CIT v.Vegetable Products Ltd.  88 ITR 192.
12. On a consideration of the entire facts, we hold that the assessee having purchased the two lorries and taken delivery of them on 19-10-1975 has become the owner of them. The lorries are owned by the assessee and are used in its business. Thus, it has satisfied the conditions laid down in section 32. Thus, we hold that the assessee is entitled to depreciation on the two lorries. We direct the ITO to allow the depreciation.