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. 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. We have heard Mr. K. C. Bhandari, learned counsel for the assessee, and Mr. J. P. Joshi, learned counsel for the Revenue. 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. 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."
(3.) 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. " 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. 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 [1971] 82 ITR 570 (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, " ;