V.P. Tyagi, C.J.
1. Both these matters can be disposed of by one order as similar questions of fact and law are involved in them.
2. The assessee entered into an agreement with M/s. Sanghi Brothers of Jodhpur for the purchase of the Chetak Cinema along with its building. machinery, furniture, etc. An agreement of sale was consequently executed on September 29, 1964. It is not disputed that, in pursuance of the terms of that agreement, Rs. 7,00,000 were paid by the assessee to the owner as part of the sale consideration against the total sale price fixed at Rs. 7,50,000. It is also not disputed that the possession of the property was handed over to the assessee in pursuance of the said agreement. The assessee started running the cinema and claimed in his annual return depreciation in respect of the building, machinery, etc., for the assessment years 1966-67 and 1967-68. The assessing authority disallowed the said depreciation on the ground that the assessee had not become the ' owner ' of the assets, because no deed of conveyance was either executed or registered in favour of the assessee. The order of the ITO was, however, upheld in appeal both by the AAC and the Tribunal. The assessee made an application under Section 256(1) to refer the question to the High Court, which according to him, involved an important question of law. The learned members of the Tribunal, while disposing of that application, observed that the facts stated above undoubtedly raise a question of law, but since the answer to this question was patent in the light of the interpretation of Section 32 of the I.T. Act and the two Supreme Court cases, namely, Alapati Venkataramiah v. CIT : 57ITR185(SC) and CIT v. Bhurangya Coal Co. : 34ITR802(SC) , the question need not be referred to the High Court. The assessee's application was, therefore, dismissed. It is in these circumstances that these applications have been made by the assessee under Section 256(2) to order the Tribunal to state the case and refer the matter to the High Court.
3. Mr. H. M. Parekh, on behalf of the assessee, urged that under Section 53A of the Transfer of Property Act the assessee had acquired equitable ownership in the property entitling him to claim for the depreciation of building and other assets transferred to the assessee under the agreement of sale and, therefore, the law laid down by the Supreme Court in the aforementioned two cases relied upon by the Tribunal, which relates to the question of the capital gains tax, cannot govern the question raised in the present case. He further urged that no doubt the Delhi High Court in CIT v. Hindustan Cold Storage and Refrigeration P. Ltd. : 103ITR455(Delhi) have decided the question against the assessee, but according to Mr. H. M. Parekh, that judgment of the Delhi High Court is not binding on this court and since there is no direct decision of the Supreme Court or of this court on the point involved in these cases, the question of law raised by the assessee should in all fairness be referred to and answered by this court.
4. Mr. S. K. Mal Lodha, appearing on behalf of the revenue, referred to certain cases of some other High Courts, which have a direct bearing on the question raised by the assessee, but he could not point out any judgment of the Supreme Court, except the two judgments referred to in the order of the Tribunal which according to him may resolve the controversy finally. We may state that the judgments of the Supreme Court in Alapati Venkata-ramiah v. CIT : 57ITR185(SC) and CIT v. Bhurangya Coal Co. : 34ITR802(SC) pertain to the question of accruing of the capital gains and in this connection the Supreme Court has said that the gains accrue only when the title of the property passes on to the purchaser by a validly registered document. We need not of course express our opinion about the principle decided by the Supreme Court in these two cases at this stage, but it is obvious that the question of law decided by the Supreme Court in these two cases has no direct bearing on the question arising out of the interpretation of Section 32 of the I.T. Act.
5. Mr. Lodha further argued that the doctrine of equitable ownership has no application in India, where the provisions of Section 54 of the Transfer of Property Act specifically lays down that a contract of sale of real property does not create any interest in or charge upon the immovable property in India. In support of his contention reliance has been placed by him on a Privy Council case in Maung Shwe Goh v. Maung Inn AIR 1916 PC 139.
6. The points urged before us by the learned counsel for the parties need not be answered at this stage, because they would be discussed by this court when the reference shall be decided by the court. If any opinion is expressed at this stage it will prejudice the matter. We, therefore, do not want to enter into the controversy raised by the parties regarding the points argued before us. Suffice it to say that the question involved is undoubtedly a question of law and, in the light of the circumstances of these cases, we can say that there is a substantial question of law which needs consideration by this court, as there is no direct case of the Supreme Court or of this court on the point involved herein. We, therefore, direct that the Income-tax Appellate Tribunal may state the case and refer the following question to this court for answer:
' Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is not entitled to the claim of depreciation.'
7. The applications are disposed of accordingly.