S.K. Mal Lodha, J.
1. The Income-tax Appellate Tribunal, Jaipur Bench, Jaipur ('the Tribunal'), has referred the following question for the opinion of this court;
' Whether, on the facts and in the circumstances of the case, on the true interpretation of Section 22 of the Income-tax Act, 1961, the Tribunal was justified in upholding the inclusion of the entire income from property in the hands of the assessee, Shri Saiffuddin ?'
2. The assessee, Saiffuddin, is an individual. The assessment years in question are 1971-72 and 1972-73. The sources of income of the assessee are from the house property and share income from M/s Khan Mohd. Katha Trading Co. and M/s Mohd, Hussain Anwar AH. The assessee purchased a plot on which, subsequently, Park View Hotel was constructed, for Rs. 53,200 from the U.I.T., Udaipur, in the financial year 1963-64. He withdrew the aforesaid sums in four equal instalments of Rs. 13,300 from M/s. Khan Mohd. Katha Trading Co. on December 18, 1963, April 8, 1964, November 10, 1964, and February 18, 1965. These sums were debited to a separate account in the name of the assessee in the books of the said firm. A sum of Rs. 59,760 was spent on the construction of Park View Hotel, which was started in October, 1967, and was completed in September, 1968. The entries in the books of account of the firm were reversed in the assessment year 1968-69 by crediting the account of the assessee by Rs. 53,200 and debiting the account of the assessee and alleged two owners, viz., Allah Bux and Abid Ali, by Rs. 17,733 on July 9, 1968. The copies of the building account of the firm's books, assessee's account. Allah Bux and Abid Ali's accounts were produced.
3. The question that arose before the Income-tax Officer, ' A ' Ward, Udaipur (ITO), was whether the assessee, Saiffuddin, was the owner of the property (Park View Hotel) and the income therefrom should be assessed in his hands. The ITO came to the conclusion that the property belonged to the assessee and the income therefrom should be taxed in the hands of the assessee in respect of the assessment years 1971-72 and 1972-73. The assessee went in appeal and the AAC by his order dated June 27, 1975, concurred with the findings of the ITO and dismissed the appeal. A further appeal was taken by the assessee and the Tribunal by its judgment dated October 18, 1976, dismissed the appeal and affirmed the findings of the AAC. An application under Section 256(1) of the Act was made by the assessee to the Tribunal and as the aforesaid question arose out of its order, it drew up a statement of the case and referred it for our opinion.
4. We have heard Mr. K. C. Bhandari, learned counsel for the assessee, and Mr. J. P. Joshi, learned counsel for the Revenue.
5. Before we proceed to answer the question referred to us by the Tribunal, it will be relevant here to consider the findings of the taxing authorities and the Tribunal in respect of the house property in question.
6. The ITO by his order dated February 22, 1974, in respect of the assessment year 1971-72 has found that the plot in question on which the house property is constructed was purchased by the assessee for Rs. 53,200 from the U.I.T., Udaipur. That amount was withdrawn by the assessee as is evidenced by the books of M/s Khan Mohd. Katha Trading Co., Udaipur, on various dates. The same entries were reversed in assessment year 1968-69 by crediting the account of the assessee by Rs. 53,200 and debiting the account of the assessee and the alleged two owners, Allah Bux and Abid Ali, by Rs. 17,733 on July 9, 1968. Regarding the amount spent for the construction, the ITO has observed as under;
' Though part of the cost of construction have been paid by Shri Allah Bux and Abid Ali, they are not the owners of the property as no transfer deed has been registered so as to establish the transfer of the immovable property in question. The income from property known as ' Park View Hotel' shall, therefore, be taxed in the hands of the assessee.'
7. In appeal, the AAC affirmed the findings recorded by the ITO. The AAC observed as under:
' Thus, having regard to the above discussion, I would hold that the journal entries in the A/c books of M/s. Khan Mohd. Katha Trading Co., on which so much reliance has been placed by the A/R, are really of non-significance and, therefore, they do not provide any support to the appellants' claim that the property was really acquired by the appellant along with his two brothers and in fact from the very beginning the intention was to acquire the property by these three persons jointly.......I feel that this has been deliberately not done because the so-called claim of joint ownership appears to be designed only for taxation purposes and not for civil law purposes for which the appellant wants to remain the absolute owner.
Thus, applying the above tests, I would hold that the appellant was the sole legal owner of the property constructed on plot No. 9/37, opposite Town Hall, Udaipur, and in which, later on, a hotel under the name of Park View Hotel is being run and, therefore, the entire income therefrom is to be included in his total income in view of the provisions of Section 22 of the Act of 1961, notwithstanding the fact that a part of the cost of construction of property was later on reimbursed by his two brothers, S/Shri Allah Bux and Abid AH, I would, therefore, confirm the finding of the ITO on this behalf and reject the contention of the appellant. '
8. On further appeal, while dismissing the appeal against the order of the AAC, the Tribunal came to the following findings :
(1) that the plot in question was purchased by Shri Saiffuddin from the U.I.T. and the sales certificate was issued in his name. The entire payment was made by him.
(2) Even the cost of construction of the property was borne by Shri Saiffuddin.
(3) It is settled law by now that title to the land and building could not pass to other persons till the conveyance was executed and registered. Having considered the findings recorded by the taxing authorities as well as by the Tribunal, we may at once mention that so far as the purchase of the plot by Saiffuddin is concerned, the Tribunal has based its finding on the material on record, after considering the documentary evidence which consists of account books of the firm and the circumstances emerging therefrom. It is a finding of fact. The Tribunal has reached the conclusion that the plot was purchased by the assessee from the U.I.T. in his own name and the price for the purchase of the plot was borne by him. As regards the finding that the cost of construction was also incurred by the assessee is concerned, the Tribunal, in our opinion, did not consider the material on record and it is based on irrelevant consideration. The construction of Park View Hotel was started in October, 1967, and it was completed in September, 1968. On the construction, a sum of Rs. 59,760 was spent. It is clear from annexure A-1 that from October 17, 1967, to September 14, 1968, a sum of Rs. 59,760 was spent. It is further clear that it was the firm which made the payment to the contractor Noor Mohd. from time to time and subsequently this sum was distributed amongst the partners, viz., assessee-Saiffuddin, Allah Bux and Abid Ali. The firm debited it (the amount of cost of construction) in equal proportion to the partners of the firm, viz., assessee-Saiffudddin, Allah Bux and Abid Ali. In these circumstances, there was no basis for the Tribunal to hold that the amount of the cost of construction of Park View Hotel was spent by the assessee. It is established that the amount for the construction of the house property, viz., Park View Hotel, was spent by the firm in the first instance and it paid the amount of construction from time to time to the contractor, Noor Mohd. There is no agreement between the assessee and his two brothers for the construction of Park View Hotel and further that neither the mutation was made nor was the registered sale deed executed by the assessee in favour of his brothers, Allah Bux and Abid Ali, so as to pass valid title to them. The sheet-anchor of the argument of the learned counsel for the assessee is that for the purpose of Section 22 of the Act, the assessee was the owner only of 1/3rd share of Park View Hotel and that it was wrongly found by the Tribunal that the assessee is the sole owner of Park View Hotel as not only he purchased the plot on which Park View Hotel was constructed but he spent the money on its construction. It is correct that no sale deed as required by Section 54 of the Transfer of Property Act was executed by the assessee in favour of his two brothers and further that there was no agreement between his two brothers stipulating that each one of them has 1/3rd share in the build-ing (house property known as Park View Hotel). Whale disagreeing with the Tribunal, we have already held that the expenditure on the construction of Park View Hotel was spent by the firm and, thereafter, the assessee as well as his two brothers agreed to bear l/3rd share thereof. From the foregoing discussion, it is clear that the plot was the property of the assessee and thus, he is the owner. So far as the construction . on the plot is concerned, viz., super structure, it belongs to the assessee-Saiffuddin and his two brothers, Allah Bux and Abid Ali.
9. The question that, therefore, crops up is whether the assessee is the sole owner of the construction or his two brothers, Allah Bux and Abid Ali are also its owners along with him. In Section 22 of the I.T. Act, 1961 (' the Act' herein), the word used is ' owner ' and, therefore, whether on these facts, the assessee is the exclusive owner of Park View Hotel or his two brothers, Allah Bux and Abid Ali, are also its joint owners. The term ' owner ' has various meanings which depends on the context in which it is used. Infodha Mal Kuthiala v. CIT : 82ITR570(SC) , while considering Section 9 of the Indian I.T. Act, 1922 ('the old Act'), it was held that for the purpose of Section 9 of the old Act, the owner must be a person who can exercise the rights of the owner, not on behalf of the owner but in his own right. It was observed (p. 575)
' It is true that equitable considerations are irrelevant in interpreting tax laws. But, those laws, like all other laws, have to be interpreted reasonably and in consonance with justice, '
10. From the aforesaid decision of the Supreme Court in Jodha Mat Kuthiala's case : 82ITR570(SC) , it follows that for the purpose of Section 22, the owner must be that person who can exercise the rights of the owner in his own right. There is no dispute in this case that there is no conveyance or any deed whatsoever for the transfer of the ownership of the plot which was purchased by the assessee and on which the construction was raised by the assessee and his two brothers, Allah Bux and Abid Ali. The position, thus, boils down to this: that the plot is owned by the assessee and the superstructure on it was raised by him and his two brothers, Allah Bux and Abid Ali. The question, therefore, is as to who is the owner of the property within the meaning of Section 22 of the Act.
11. Before a Division Bench of the Madras High Court, the meaning of the word 'owner' as used in Section 9(1) of the old Act came up for consideration in CIT v. Madras Cricket Club : 2ITR209(Mad) . In that case, the construction on the plot was made by the lessee. The lessee was entitled to remove the building on the termination of the lease. It was held that in order that a person may be assessed as the owner of a building under Section 9(1) of the old Act, it is not necessary that he should also be the owner of the land on which, the building stands. While considering the question regarding the ownership, it was observed as under (p. 215):
' The rule in India which is different from that in England, is that a person who builds a superstructure upon the land of another man remains the owner of the superstructure and can at the end of his term remove that superstructure from the land, whereas in England a person who erects a building on the land of another cannot do so as the building at the end of the lease becomes the property of the lessor.'
12. In CIT v. Fazalbhoy Investment Co. (P.) Ltd. : 109ITR802(Bom) , the assessee agreed to lease out a piece of its land to build flats on behalf of flat owners with money advanced by flat owners. The flat owners occupied flats. The lessee gave up the land to the assessee under unregistered consent decree. A dispute between the assessee and the flat owners arose. The flat owners executed the lease deed to the assessee by way of compromise. The question arose whether the assessee was the owner of the flats and liable to tax under Section 9(1) of the old Act. While repelling the contentions raised on behalf of the Revenue that the assessee is the owner of the flats standing on the plot, it was observed that the building had been constructed with the moneys of the flat owners who were in actual possession of the respective flats in the building. Therefore, neither Section 108(h) of the Transfer of Property Act, nor any principle analogous thereto could be of any assistance to the Revenue for contending that the assessee was the owner of the building standing on the plot. Therefore, the income from the property was not assessable under Section 9(1) of the old Act,
13. In Kala Rani v. CIT , there was an agreement dated March 17, 1964, for purchase of an incomplete house. The sale deed in favour of the assessee was executed on February 11, 1969. The house was completed and occupied in previous years relevant to assessment years 1968-69 and 1969-70. The entire consideration was paid at the time of agreement of sale. The question arose whether the income from property is to be included in the assessee's income for the assessment years 1968-69 and 1969-70 under Section 22 of the Act. On those facts, it was held that the assessee occupied the property after the execution of the agreement of sale deed dated March 17, 1964, in his favour and after the completion of the building, he was not in a position to earn income from the property sold to him. Further, the entire consideration was paid to the vendor earlier at the time of the execution of the agreement to sell dated March 17, 1964, and no payment was made at the time of the execution of the registered sale deed dated April 11, 1969. Therefore, the Tribunal was right in holding that the income from the self-occupied property was includible in the assessee's income for the assessment years 1968-69 and 1969-70.
14. In view of Jodha Mal Kuthiala's case : 82ITR570(SC) , it is clear that for its (Section 22) purpose, the owner must be that person who can exercise the rights of the owner not on behalf of the owner but in his own right, It cannot, therefore, be accepted that before a person can be assessed under Section 22 of the Act, he must be the owner of the property by virtue of a sale deed in his favour. Section 22 of the Act brings to tax the income from property and not the interest of a person in the property. As a matter of fact, what is being taxed under Section 22 of the Act 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 income from the house property. If in a case, it is found as a fact that the assessee is in occupation of the building as owner for all intents and purposes, except the sale deed in his favour, even then, he is liable to income-tax under Section 22 of the Act, While respectfully following Madras Cricket Club's case : 2ITR209(Mad) , Fazalbhoy Investment Co.'s case : 109ITR802(Bom) and Kala Rani's case , we, therefore, hold that so far as the construction on the plot which was purchased by the assessee is concerned, the expenses of which were borne by the assessee and his brothers, Allah Bux and Abid Ali, in equal proportion, the assessee and his two brothers are joint owners.
15. It may be stated that Section 53A, which has been referred to on behalf of the assessee is not applicable, for, it cannot be availed of by the assessee for establishing his title. It is only a weapon of defence. Apart from that, Section 53A of the Transfer of Property Act is applicable if there is an agreement in writing signed by the assessee or on his behalf, from which the terms necessary to effectuate the transfer can be ascertained with reasonable certainty. In this case, admittedly, there is no writing and, therefore, Section 53A of the Transfer of Property Act could not be availed of by the assessee. Be that as it may, the assessee and his two brothers are the joint owners of Park View Hotel each having 1/3rd share. The Tribunal was not right in holding that the entire income from the property is liable to be assessed in the hands of the assessee.
16. The question referred to us is answered in the negative, i, e., in favour of the assessee and against the Revenue.
17. There will be no order as to costs of this reference.
18. Let the answer be returned to the Tribunal in accordance with Section 260(2) of the Act,