SINGHAL, J. - (1.) THE Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated September 29, 1979, in respect of the assessment year 1972- 73 under section 256 (1) of the Income Tax Act, 1961- "whether on the facts and in the circumstances of the case, the Tribunal was right in holding that property income of Rs. 1,00,228/- pertaining to 1/2 share of Tiecion House, Bombay is assessable in the assessment of the assessee for the assessment year 1972-73 ?"
(2.) THE brief facts of the case which are relevant for the determination of the above question are that the assessee had purchased 1/2 share in the immovable property known as Tiecicon House from one Shri S. N. Desai by an assignment deed dated March 29,1967 which was not registered. THE assessee had sold the said 1/2 share to Eklingji Trust under an assignment deed dated September 29, 1970 which was presented before the Sub Registrar for registration on December 24,1970. THE deed so presented was registered on May 17,1975. THE assessee submitted before the assessing authority that the income from such property could not be assessed in her hands as she was legally divested of her title by the deed dated September 21, 1970 which was presented for registration on December 24,1970, and registered on May 17,1975. THE assessing authority rejected the assessee's contention and held that the title of immovable property could pass from the date of registration and he accordingly assessed the income of Rs. 1,00,228/- relating to 1/2 share of such property in the assessments of the assessee. On appeal before the AAC it was held that the said income could not be added in the total income of the assessee, and the appeal was allowed. The Income-Tax Officer was directed to ask the appellant to produce the original copy of the sale deed so as to verify the fact of registration from the Sub-Registrar and if the fact of registration is found to be correct then to exclude the income of this property from the total income of the assessee. The matter was challenged by the Revenue before the Income Tax Appellate Tribunal and the Tribunal came to the conclusion that unless there is transfer of property by a registered sale deed the title in respect thereof does not pass and the assessee being the owner of the property, the income has to be assessed in the hands of the assessee. The submission of the learned counsel for the assessee is that the sale is complete on the date the sale deed was executed and at any rate on the date it was presented for registration before the Sub Registrar and therefore the assessee ceased to be the owner thereof in view of the provisions of Section 47 of the Indian Registration Act. It is also submitted that in accordance with the provisions of Section 53-A of the Transfer of Property Act Eklingji Trust remained in possession of the property and was owner of the same during the relevant assessment year. It is further submitted that under Section 22-of the Income Tax Act it was Eklingji Trust alone who could exercise its right as owner of the said property, and after the submission of the sale deed before the Sub Registrar the assessee ceased to have any right, title or interest in the said property. The assessee had received full price and the transferee was in possession of the property and was realising the rent from the tenants. The submission of the learned counsel for the department is that the immovable property of more than Rs. 100/- could be transferred by a registered instrument only and since there was no sale as defined under Section 54 of the Transfer of Property Act, there was no transfer of ownership. Since the registration of the property under Section 49 of the Registration Act was complete in 1975 it was only at that point of time that the property was transferred in favour of Eklingji Trust. It is further submitted that in the case of Ram Saran vs. Domini Kuer and others (1), the majority view of the Apex Court with regard to the interpretation of the provisions of sec. 47 of the Registration Act was as under : - "we do not think that the learned Attorney General's contention is well founded. We will assume that the learned Attorney General's construction of the instrument of sale that the property was intended to pass under it on the date of the instrument is correct. Section 47 of the Registration Act does not however say when a sale would be deemed to be complete. It only permits a document when registered to operate from a certain date which may be earlier than the date when it was registered. The object of this section is to decide which of two or more registered instruments in respect of the same property is to have effect. The Section applies to a documents only after it has been registered. It has nothing to do with the completion of the registration and therefore nothing to do with completion of a sale when the instrument is one of sale. A sale which is admittedly not completed until the registration of the instrument of sale is completed, cannot be said to have been completed earlier because by virtue of S. 47 the instrument by which it is effected after it has been registered, commences to operate from an earlier date. Therefore, we do not think that the sale in this case can be said in view of S. 47 to have been completed on January 31,1946. The view that we have taken of S. 47 of the Registration Act seems to have been taken in Tilakdhari Singh Vs. Gour Narain AIR 1921, Pat-150. We believe that the same view was expressed in Naresh chandra Dutta V. Girish Chandra Das ILR 62 Cal 979 (AIR 1936 Cal 17) and Gobardhan Bar V. Gana Dhar Bar ILR (1940)2 Cal 270 (AIR 1941 Cat 78)". The decision in the case of Hiralal Agarwal Vs. Rampondarth Singh (2), has also been relied upon where it was observed- "this contention, however cannot be accepted in view of the decision in Ram Saran Lal V. Mst. Domini Kuer 1962 2 SCR 474 (AIR 1961 SC 1747) where this Court rejected an identical contention. Mr. Desai tried to distinguish that case on the ground that it was based on Mohamadan Law but on the effect of S. 47 of the Registration Act, the majority decision clearly laid down that the sale there was complete only when registration of the sale deed was completed as contemplated by S. 61 of the Registration Act and therefore the talab-i-movasibat made before the date of completion of registration was premature and a suit based on such a demand of the right of pre-emption was premature and must, therefore, fail. " Reliance has also been placed on the decision in the case of R. B. Jodha Mal Kuthiala V. CIT (3) and CIT V. Bimen Behari Shaw Shabait (4) and also on the case of CIT V. Ganga Properties Ltd (5) on the basis of which it has been submitted that it is only the legal owner who is to be assessed in respect of the income from the property.
(3.) RELIANCE has also been placed on the decision in the case of Hall and Anderson (Private )Ltd. V. CIT (6), K. C. Pal Chowdhary V. CIT (7) and Alamati Venkatarmiah V. CIT We have considered over the matter. Section 47 of the Registration Act provides that a registered document shall operate from the time from which it would have commenced to operate if no registration thereof had been required or made, and not from the time of its registration. From a perusal of Sec. 47 of the Registration Act it is evident that it is applicable in respect of a document which is not required to be registered and if it is required to be registered and not registered, then it will be effective from the date of commencement on which it would have commenced to operate i. e. the date of execution and not from the date of its registration. Section 48 provides that all non- testamentary documents duly registered under the Registration Act and relating to any property whether movable or immovable shall take effect against any oral agreement or declaration relating to such property unless where the agreement or declaration has been accompanied or followed by delivery of possession and the same constitutes a valid transfer under any law for the time being in force. In the case of CIT V. Jhanzie Tea Association, where the assessee, a non-resident company, entered into an agreement of sale of a tea estate with effect from January 1,1969 and other three estates with effect from January 1,1970 but the deeds of conveyance in favour of the purchasers were not executed within the relevant previous year, the Calcutta High Court held that there was diversion of income by over-riding title and the income from tea business from January 1,1969 in the case of one tea estate and from January 1,1970 in respect of the other three tea estates was not liable to be assessed in the hands of the assessee. While interpreting the provisions of S"ction 9 of the Income-Tax Act, 1922 the Apex Court has held in the case of R. B. Jodha Mal Khuntiala (supra) that the owner must be specific who can exercise the rights on his own behalf. Section 54 of the Transfer of Property Act has contemplated that for a valid transfer of the ownership of immovable property having the value of more than Rs. 100/- the same should be by a registered document. Section 22 of the Income-Tax Act, 1961 reads as under: - "22. The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which any chargeable to income-tax shall be chargeable to income-tax under the head 'income from house property". ;