VIMAL GANDHI, PRESIDENT ORDER This appeal by assessee for asst. yr. 2001-02 is directed against order of CIT(A) upholding assessment of Rs. 36,00,000 as rental income assessable in hands of assessee under head "House property". 2. facts of case are that one Professor Harnam Singh is owner of property located at 55-A, Friends Colony (East), New Delhi. It was let out to Modi Rubber Ltd. from time to time. Last written lease having expired somewhere in 1994, company was holding over. It is claimed that Prof. Harnam Singh was not able to get premises vacated from M/s Modi Rubber, therefore, he executed lease on 17th Nov., 1998 in favour of assessee company (appellant) for period of 9 years and 11 months, lease to commence from date assessee appellant was able to get possession of property. Clause 6 of above deed provided that appellant was entitled to sublet premises to any third party on terms and conditions to be settled by appellant. 3. It is stated that appellant negotiated with M/s Modi Rubber Ltd. to vacate property and after great deal of negotiations, M/s Modi Rubber Ltd. agreed to pay enhanced rent of Rs. 25,000 per month with retrospective effect from 16th June, 1999. Subsequently, lease rent from 1st June, 2001 was enhanced from Rs. 25,000 per month to Rs. 1,25,000 per month with retrospective effect from 16th June, 1999. It is stated by assessee that difference of rent of Rs. 1,00,000 per month (Rs. 1,25,000 minus Rs. 25,000) for period 16th June, 1999 to 31st March, 2001 was offered to tax in asst. yr. 2002-03 on due basis. 4. second floor of aforesaid premises was let out by appellant to M/s Gujarat Guardian Ltd. on rent of Rs. 1,20,000 per month for 3 years w.e.f. 1st April, 1999. appellant declared rental income of Rs. 17,40,000 as per details given below for assessment for assessment year under consideration, under head "Other sources" : "Therefore, appellant declared rental income amounting to Rs. 17,40,000 under head "Income from other sources" as per details given below : (1) Rent received from Modi Rubber Ltd. Rs. 3,00,000 (Rs. 25,000 x 12 = Rs. 3,00,000) (2) Rent received from Gujarat Guardian Ltd. Rs. 14,40,000 (Rs. 1,20,000 x 12 = Rs. 14,40,000) Total Rs. 17,40,000 arrears of rent on account of enhancement with retrospective effect were offered for tax in asst. yr. 2002-03." 5 . appellant claimed that rent received as lessee was liable to be assessed under head "Other sources" as appellant was not owner of premises. 6. AO noted that property in question was in occupation of Shri V.K. Modi, Director of M/s Modi Rubber Ltd. who was using ground floor and first floor of property as his residence. Second floor was let out to M/s Gujarat Guardian Ltd. For all practical purposes entire property was in occupation of Shri V.K. Modi and used by him for his residence. AO also observed that total area in occupation of M/s Gujarat Guardian Ltd. was less than 1/3rd of area in occupation of M/s Modi Rubber Ltd. AO also found that assessee had incurred more than Rs. 16 lakhs as expenditure on civil and other works, but no detail of expenses incurred was furnished. AO assessed rental income under head "House property" income by applying s. 27 of IT Act and by taking annual letting value of property at Rs. 36 lakhs. However, no reasons are available in assessment order why income has been taken under head "House property" when assessee disclosed rent as income under head "Other sources." 7 . AO also disallowed expenditure claimed by assessee against rental income. He allowed expenditure, as are permissible under head "House property". 8 . assessee challenged above assessment in appeal before CIT(A) and reiterated its submission that rental income has to be assessed under head Other sources , as assessee appellant was merely lessee. As p e r registered lease deed dt. 17th Nov., 1998, Prof. Harnam Singh was owner of property and therefore there was no question of taking assessee as beneficial owner under s. 22 of IT Act or deemed owner under s. 27(iiib) of IT Act. It was contended that assessee appellant had rightly returned rental income under head "Other sources" and question of enhancing that income on notional basis did not arise. As corollary, it was contended that expenditure claimed were wrongly disallowed. 9 . learned CIT(A) held that beneficial owner could be treated as owner of property for purposes of s. 22 of IT Act. For this view, learned CIT(A) placed reliance on decisions of Hon ble Supreme Court in cases of CIT vs. Podar Cement Ltd. vs. (1997) 141 CTR (SC) 67 : (1997) 226 ITR 625 (SC) and R.B. Jodhamal Kuthiala vs. CIT (1971) 82 ITR 570 (SC). On close perusal of lease deed executed by Prof. Harnam Singh, learned CIT(A) concluded that assessee was "beneficial owner" of property and was entitled to enjoy rental income from property in his own right. She referred to and relied upon cls. 3, 6, 7, 8, 9 and 10 of lease deed, which permitted assessee to use property, to make addition or alterations and give it on lease or sublet. She also held that period of lease is not restricted to 9 years 11 months as that period was provided only as "first instance" clearly implying that it could be extended for unlimited period. learned CIT(A) also took into account cl. 13 of deed providing for payment of refundable security of Rs. 35 lakhs to lessor. She accordingly held that annual value of property was liable to be assessed under head House property under s. 22 of IT Act. 10. Alternatively, learned CIT(A) examined question of assessment of rental income under head "House property" under s. 27(iiib) of IT Act. On conjective reading of provision of s. 27(iiib) r/w cl. (f) of s. 269UA of Act, he held that assessee was deemed owner of properties as stipulated period of lease of 9 years 11 months was fixed, "at first instance", which implied that there was no restriction to extend this period for unlimited term. period of lease, therefore, was not less than 12 years. matter was thus treated as covered under Explanation to sub-cl. (i) of cl. (f) of s. 269UA of Act. Thus assessment of rental income under head "House property" was held to be justified in terms of s. 27(iiib) of Act. 10.1 learned CIT(A) also considered question of fixation of annual letting value of property at Rs. 36 lakhs. For reasons given by her in para 4.6 of order she held that annual letting value was correctly and properly fixed at Rs. 36 lakhs. 10.2 learned CIT(A) also upheld disallowance of expenditure incurred on repair, etc. amounting to Rs. 16,02,179. This way, entire appeal of appellant was dismissed. 11. assessee is aggrieved and has brought issue in appeal before Tribunal. Shri Ajay Vohra, learned counsel for assessee, vehemently contended that there is no sale deed in favour of assessee and therefore assessee cannot be termed "owner of house property". He was merely lessee. owner must have all rights of ownership. beneficial owner is one who has dominion over property and can exercise all rights of ownership with small defect in its title; say want of registered deed. owner apart from letting out property should be in position to sell or transfer property in any manner he likes. No such right was available to assessee appellant. Shri Vohra argued that decisions of Hon ble Supreme Court in cases of CIT vs. Podar Cement (P) Ltd. & Ors. (supra), Mysore Minerals Ltd. vs. CIT (1999) 156 CTR (SC) 1 : (1999) 239 ITR 775 (SC) and R.B. Jodhamal Kuthiala vs. CIT (supra) were distinguishable. There assessee had all rights of owner without transfer of title and therefore assessee was held to be owner of property. Here Prof. Harnam Singh, as lessor, was owner and assessee had right to exploit property for period of 9 years and few months on terms and conditions stipulated in lease deed. He cannot be treated as owner or beneficial owner of property. Shri Vohra also contended that assessee was wrongly held to be deemed owner of property under s. 27(iiib) of IT Act. period of lease here was for 9 years and 11 months and cannot be imagined to be for 12 years as provided under cl. (f) of s. 269UA. There was no question of estimating annual letting value as rental income was liable to be assessed under head "Other sources". Shri Vohra also pressed his claim for allowability of expenditure of Rs. 16,02,179 under head "Other sources" as expenses were incurred wholly for earning and making income returned by assessee under head "Other sources". 12. Shri Dehiya, learned Departmental Representative, read out different clauses of lease deed to emphasize that assessee was beneficial owner of property and was rightly assessed in terms of s. 22 of IT Act. He argued that assessee was exercising all rights over property which only owner would exercise. Shri Dehiya however did not support claim that assessee could be deemed to be owner of property under s. 27(iiib) of IT Act as period of lease was less than 12 years. Shri Dehiya also supported impugned order on disallowance of expenses claimed in return. 13. We have given careful thought to rival submissions of parties and examined them in light of material available on record. We shall first examine question of applicability of s. 27(iiib) of IT Act where person can be "deemed to be owner of house property". Clause (iiib) covers acquisition of any right in or with respect to any building by virtue of any such transaction as is referred to in cl. (f) of s. 269UA of Act. Now, turning to aforesaid cl. (f), it is clear that "transfer in above clause would include lease for term of not less than 12 years". 14. In present case, it is admitted that lease deed dt. 17th Nov., 1998 is for period of 9 years and 11 months. It is no doubt stated that said period is fixed "at first instance", but then there is no material to show that it was extended or could be extended so that total period of lease could be held to be "not less than 12 years". gap that exists between 9 years and 11 months and 12 years has been filled up by Revenue authorities on imagination only. There is no material to support or hold that period of lease fixed between assessee and Prof. Harnam Singh was more than 9 years and 11 months. Thus, without material and on imagination, case cannot be taken to be covered under cl. (f) of s. 269UA of IT Act. Having regard to clear facts on record, even learned Departmental Representative did not support view taken by learned CIT(A). assessee could not be treated to be deemed owner of house property. arguments of Shri Vohra on this aspect of case are held to be well taken and are accepted. 15. other pertinent question is whether assessee could be treated to be "beneficial owner of house property" under s. 22 of IT Act. Before proceeding to consider terms and conditions of deed, it is necessary to have in mind principle laid down before their Lordships of Supreme Court in two recent decisions as follows : 1. CIT vs. Podar Cement (P) Ltd. & Ors. (supra) 2. Mysore Minerals Ltd. vs. CIT (supra). 1 5 . 1 In case of Podar Cement (P) Ltd. (supra), respondent assessee claimed to be fulfledged owner of flat at Nepean Sea Road, Mumbai. Two of flats were directly purchased by assessee from builders and other two were purchased by sister-concern and subsequently by assessee from sister-concern. possession of flats was taken after payment of full consideration in August, 1973. All flats were let out by assessee to various persons and rental income was included in return under head "Other sources" as assessee had claimed that it was not legal owner of property. It was claimed that without legal ownership i.e. without transfer of property in name of assessee, rental income could not be assessed under head "House property". AO however assessed only letting value of flats on basis of rent receivable and rejected claim of expenditure made by assessee under s. 56 of IT Act. Tribunal however accepted claim of assessee. This led to reference of following question to Hon ble High Court : "Whether, on facts and in circumstances of case, Tribunal was justified in law in holding that income derived by assessee company from flats from building known as Silver Arch of Bombay is taxable under head Income from other sources under s. 56 of IT Act and not income from house property under s. 22 of IT Act, 1961 ?" 16. Ultimately, matter was taken to Supreme Court on question whether assessee should be taken to be owner of house property. Reliance was placed before Hon ble Supreme Court on several decisions including case of Jodhamal Kuthiala vs. CIT (supra). Their Lordships of Supreme Court, after taking into account scheme of IT Act, particularly provisions relating to assessment of house property income assessable under head "Other sources" and large number of decisions of High Courts held as under : "We, therefore, need not go into questions involving trusts where person holds property and receives income in trust for others who are legal beneficiaries. crux of matter is as to whether, as already stated above, actual possession in given particular case gives right to retain such possession until contrary is proved and so long as that is not done, to what extent possessor is presumed to be owner ?. Incidentally, although Supreme Court in case of Jodhamal s case (supra) merely mentioned that Stroud s Judicial Dictionary had given several definitions and illustrations of ownership, it refrained from going into details on account of practical approach that was made in that case, to which we shall hereinafter refer and dilate upon. We think it worthwhile, matter having been canvassed at length at Bar, to give full illustration of definitions of ownership as Stroud puts it. One such definition is that owner or proprietor of property is person in whom (with his or her assent) it is for time being beneficially vested, and who has occupation, or control, or usufruct, of it, e.g., lessee is, during term, owner of property demised. Yet another definition that has been given by Stroud is that : Owner applies to every person in possession or receipt either of whole, or of any part, of rents or profits of any land or tenement; or in occupation of such land or tenement, other than as tenant from year to year or for any less term or as tenant at will . (Stroud s Judicial Dictionary, 3rd Edn., Vol. 3 p. 2060). Thus, juristic principle from viewpoint of each one is to determine true connotation of term owner within meaning of s. 22 of Act in its practical sense, leaving husk of legal title beyond domain of ownership for purpose of this statutory provision. reason is obvious. After all, who is to be taxed or assessed to be taxed more accurately person in receipt of money having actual control over property with no person having better right to defeat his claim of possession or person in legal parlance who may remain remainder man, say, at end of extinction of period of occupation after, again say, thousand years ? answer to this question in favour of assessee would not merely be doing palpable injustice but would cause absurd inconvenience and would make legislature to be dubbed as being party to non-sensical legislation. One cannot reasonably and logically visualise as to when person in actual physical control of property realising entire income and usufructs of property for his own use and not for use of any other person, having absolute power of disposal of income so received, should be held not liable to tax merely because vestige of legal ownership or husk of title in long run may yet clothe another person with power of residual ownership when such contingency arises which is not case even here. plain reading of cl. 4 of agreement, as extracted above, clearly goes to show that physical possession of properties has passed on or is deemed to have passed on to assessee to have and to hold forever and absolutely with power to use same in whatsoever manner it thinks best and assessee shall derive all income and benefits together with full power of disposal of properties as well as income thereof. Can it then be said that recipient of income being assessee only having absolute and exclusive control over property without any let or hindrance on part of so-called vendor which, indeed, under law it was not entitled to do, as we shall presently show, shall be immune from taxing provision is s. 22 of Act ? answer in our view is clearly in negative. reason is simple. consideration money has been paid in full. assessee has been put in exclusive and absolute possession of property. It has been empowered to deal with income as it likes. It has been empowered to dispose of and even to alienate property. Reference to s. 54 or, for that matter, s. 55 of Transfer of Property Act by Tribunal merely emphasises fact that legal title does not pass unless there is deed of conveyance duly registered. agreement is in writing and value of property is admittedly worth more than hundred rupees. Sec. 54 of Transfer of Property Act would, therefore, exclude conferment of absolute title by transfer to assessee. That, however, would not take away right of assessee to remain in possession of property, to realise and receive rents and profits therefrom and to appropriate entire income for its own use. so-called vendor is not permitted in law to dispossess or to question title of assessee (the so- called vendee). It was for this very practical purpose that doctrine of equity or part-performance was introduced in Transfer of Property Act, 1882, b y inserting s. 53A therein. section specifically allows doctrine of part- performance to be applied to agreements which, though required to be registered, are not registered and to transfer not completed in manner prescribed therefor by any law. section is, therefore, applicable to cases where transfer is not completed in manner required by law unless such non-compliance with procedure results in transfer being void. There is, however, distinction between agreement void as such and agreement void in absence of something which vendor could do and had expressly o r impliedly contracted to do, and where vendor agrees to sell his share of property, including sir land, there is implied term in contract that he will apply for sanction to Revenue authorities necessary for such transfers and Court will direct him to do so. It cannot be said that such agreement is void because no sanction has been obtained. In instant case, having reference to cl. 5 of agreement it would be seen that option was given to assessee to demand at its pleasure conveyance duly registered being executed in its favour by Sahay family (the vendor) and to get its name mutated in official records. assessee has not exercised its option for reasons best known to it presumably to have double weapon in its hands to be used as and when circumstances so demanded. Can it yet be said that for default on part of assessee itself it would be entitled to say that it is not owner of property for all practical purposes, receiving rent all time, appropriating usufructs for its own purposes all time and having no interference at instance of vendor ? Can that be practical and logical approach to true construction and purport of substance and spirit of s. 22 of Act ? answer, in our view, is clearly in negative and against assessee. Having taken all advantages and still taking all advantages under contract without any hindrance or obstruction on part of anyone including vendor which vendor could not do in view of s. 53A of Transfer of Property Act, assessee cannot now turn back and say that because of its default in having deed registered at its sweetwill it was not owner within meaning of s. 22 of Act. It may bear repetition to say that it was on account of these facts that juristic principles have now emerged saying that one of most important of powers of ownership is right to exclude others from possession and property right is essentially guarantee of exclusion of other persons from use or handling of thing. In that sense, therefore, assessee itself became owner of property in question. In our view, any decision to contrary would not be subservient to intent and purpose of s. 22 of Act, with regard to which, as we have already stated, we can fairly look at language used and tax laws have to be interpreted reasonably and in consonance with justice. So far we have dealt with case in this respect on juristic principles as if it were matter of first impression. We have, therefore, now to refer to case law on subject . Ultimately, learned Judges held that assessee in that case will fall under true meaning of term "owner" as used in s. 22 of Act and, therefore, liable to tax from income out of house property as owner thereof. This judgment of Patna High Court was followed by same High Court in judgment in Krishna Lal Ajmani s case (supra). 14. Rajasthan High Court in Maharani Yogeshwari Kumari s case (supra) again considered same question and after referring to various judgments held as follows : Sec. 22 of IT Act has created charge on income in respect of annual value of property consisting of any buildings or lands appurtenant thereto of which assessee is owner, other than such portions of such property as he may occupy for purposes of any business or profession carried on by him profits of which are chargeable to income-tax under h e d "Income from house property". question, therefore, arises as to whether words of which assessee is owner can be applicable only to registered owner or also to such person in whose favour registered sale deed has not been executed but sale agreement has been executed, possession of property has been given and consideration for sale has been paid. Sec. 53A of Transfer of Property Act contemplates that when any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which terms necessary to constitute transfer can be ascertained with reasonable certainty, and transferee has, in part-performance of contract, taken possession of property or any part thereof, or transferee, being, already in possession, continues in possession in part-performance of contract and has done some act in furtherance of contract, and transferee has performed or is willing to perform his part of contract, then, notwithstanding that contract, though required to be registered, has not been registered, or where there is instrument of transfer, that transfer has not been completed in manner prescribed therefor by law for time being in force, transferor or any person claiming under him shall be debarred from enforcing against transferee and persons claiming under him any right in respect of property of which transferee has taken or continued in possession, other than right expressly provided by terms of contract. proviso to aforesaid section contemplates that nothing in that section shall affect rights of transferee for consideration who has no notice of contract or of part-performance thereof. If view that without there being conveyance, transferor continues to be owner is taken, still question arises that income has not been received by owner and, therefore, whether assessment of transferee could be made by considering that there was diversion of income or transferor has ceased to have any right in respect of income received? This section debars transferor from enforcing his right to property. In case of Hamda Ammal vs. Avadiappa Pathar (1991) 1 SCC 715, it was held by apex Court that document after its registration relates back to date of execution of sale deed. Though under IT law, benefit of ownership is unknown, but still if income is assessed in hands of transferor who has not received income from property whether such transferor can be made liable to make payment of tax ? Various decisions given by different High Courts have taken different views. view of Calcutta, Bombay, Delhi and Allahabad High Courts as mentioned above is on one hand, whereas view of Andhra Pradesh High Court in case of CIT vs. Nawab Mir Barkat Ali Khan (1974) Tax LR 90 and Karnataka High Court in case of Ramkumar Mills (P) Ltd. vs. CIT (1989) 78 CTR (Kar) 141 : (1989) 180 ITR 464 (Kar) : TC 40R. 340 is different. So far as view taken by apex Court in case of Osman Ali Khan vs. CWT (1986) 57 CTR (SC) 89 : (1986) 162 ITR 888 (SC) is concerned that was in context of WT Act where language of section was different. Sec. 53A debars transferor from exercising rights of owner after he has received full consideration and handed over possession under contract. transferor in case where he has executed document and received consideration and even handed over possession of property, cannot exercise any right of owner. This Court in case of Rajputana Hotels (P) Ltd. vs. State of Rajasthan (DB Civil Writ Petition No. 511 of 1989 decided on 27th May, 1992), while interpreting provisions of Rajasthan Land and Building Tax Act, 1964, has held that person who is entitled to receive rent is assessable in respect of property even if it is not registered in his name. matter can be considered from another angle. Under IT Act, assessing authority has power to assess income in hands of real owner. If purchases property in name of X , simply because property is registered in name of X , cannot escape his liability. Secondly, there can be partnership where partners have contributed property and property has become partnership property, then no registration is required, income in such case has to be assessed in hands of partnership firm and not individuals who have contributed property. Thirdly, transferee who has received income has already been assessed in respect of income derived from such property as income from property, whether s. 22 can again invoked against transferor in respect of such income. Fourthly, in respect of co-operative society members thereof are given property on basis of allotment letters which may or may not be registered. members thereafter transfer property from one hand to another and if it is considered that it is only registered owner or society who can be assessed to tax, then person who has enjoyed income would escape liability of tax. Fifthly, if it is considered that registered owner alone is liable to pay tax while income is received by transferee, transferee would enjoy income but tax will be levied from registered owner who may or may not be in position to make payment of tax. Sixthly, there could be diversion of income by overriding title as was considered in case of Savita Mohan Nagpal vs. CIT (1984) 42 CTR (Raj) 211 : (1985) 154 ITR 449 (Raj) : TC 38R. 752. Seventhly, if property is in name of trust and beneficiary is entitled to specific share of income, whether other provisions of Act can be said to be inoperative and, eighthly, there may be some similar other instances. We do not think that it is necessary to set out extracts from judgments of other High Courts taking similar view. 15. contrary view taken by other High Courts was mainly based on t h e facts that unless there is registered deed conveying property, person in possession/enjoyment of property cannot be considered as legal owner and, therefore, he cannot be called upon to pay tax under s. 22 of Act. 16. law laid down by this Court in Jodhamal s case (supra), according to us, has been rightly understood by High Courts of Punjab & Haryana, Patna, Rajasthan, etc. requirement of registration of sale deed in context of s. 22 is not warranted. above summing up is factually based on judgments of this Court as well as English decisions. 24. Constitution Bench of this Court in Keshavlal Jethalal Shah vs. Mohanlal Bhagwandas & Anr. (1968) 3 SCR 623, while considering nature of amendment to s. 29(2) of Bombay Rents, Hotel and Lodging House Rates Control Act as amended by Gujarat Act 18 of 1965, observed as follows : amending clause does not seek to explain any pre-existing legislation which was ambiguous or defective. power of High Court to entertain petition for exercising revisional jurisdiction was before amendment derived from s. 115, CPC, and legislature has by Amending Act attempted to explain meaning of that provision. explanatory Act is generally passed to supply obvious omission or to clear up doubts as to meaning of previous Act. 25. From circumstances narrated above and from memorandum explaining Finance Bill, 1987 (supra), it is crystal clear that amendment was intended to supply obvious omission or to clear up doubts as to meaning of word owner in s. 22 of Act. We do not think that in light of clear exposition of position of declaratory/clarificatory Act, it is necessary to multiply authorities on this point. We have, therefore, no hesitation to hold that amendment introduced by Finance Bill, 1987 was declaratory/clarificatory in nature so far as it relates to s. 27(iii), (iiia) and (iiib). Consequently, these provisions are retrospective in operation. If so, view taken by High Courts of Patna, Rajasthan and Calcutta, as noticed above, get added support and consequently contrary views taken by Delhi, Bombay and Andhra Pradesh High Courts are not good law. 26. We are conscious of settled position that under Common Law owner means person who has got valid title legally conveyed to him after complying with requirements of law such as Transfer of Property Act, Registration Act, etc. But, in context of s. 22 of IT Act, having regard to ground realities and further having regard to object of IT Act, namely, to tax income , we are of view, owner is person who is entitled to receive income from property in his own right." 17. In case of Mysore Minerals Ltd. vs. CIT (supra), their Lordships have observed as under : "Sec. 32 of IT Act, 1961, confers benefit on assessee. provision should be so interpreted and words used therein should be assigned such meaning as would enable assessee to secure benefit intended to be given by legislature to assessee. It is also well-settled that where there are two possible interpretations of taxing provision one which is favourable to assessee should be preferred. Sec. 32 of Act allows certain deductions, one of them being depreciation of buildings, etc. owned by assessee and used for purposes of business or profession. terms own , ownership and owned are generic and relative terms. They have wide and also narrow connotation. meaning would depend on context in which terms are used. CIT vs. Podar Cement (P) Ltd. (1997) 141 CTR (SC) 67 : (1997) 226 ITR 625 (SC), is case under IT Act and has to be taken as trend-setter in concept of ownership. Assistance from law laid down therein can be taken for finding out meaning of term owned as occurring in s. 32(1) of Act. term owned as occurring in s. 32(1) of IT Act must be assigned wider meaning. Anyone in possession of property in his own title exercising such dominion over property as would enable others being excluded therefrom and having right to use and occupy property and/or to enjoy its usufruct in his own right would be owner of building though formal deed of title may not have been executed and registered as contemplated by Transfer of Property Act, Registration Act, etc. Building owned by assessee , expression as occurring in s. 32(1) of IT Act, means person who having acquired possession over building in his own right uses same for purposes of business or profession though legal title has not been conveyed to him consistently with requirements of laws such as Transfer of Property Act and Registration Act, etc. Generally speaking, depreciation is allowance for diminution in value due to wear and tear of capital asset employed by assessee in his business. very concept of depreciation suggests that tax benefit on account of depreciation legitimately belongs to one who has invested in capital asset and is utilizing capital asset and thereby losing gradually investment caused by wear and tear, and would need to replace same by having lost its value fully over period of time. It is well-settled that there cannot be two owners of property simultaneously and in same sense of term. intention of legislature in enacting s. 32 of Act would be best fulfilled by allowing deduction in respect of depreciation to person in whom for time being vests domination over building and who is entitled to use it in his own right and is using same for purposes of his business or profession. Assigning any different meaning would not subserve legislative intent. assessee was private limited company. During asst. yr. 1981-82 (accounting year ending on 31st March, 1981), assessee had purchased for use of its staff seven low income group houses from housing board. assessee had made part payment and was in turn given allotments of houses followed by delivery of possession by housing board. actual deed of conveyance was not yet executed by housing board in favour of assessee. assessee made claim under s. 32 of Act in respect of depreciation of buildings used for purpose of business of assessee. claim was rejected by AO. This was upheld by Tribunal and High Court. On appeal to Supreme Court : Held, reversing judgment of High Court, that finding of fact arrived at in case at hand was that though document of title was not executed by housing board in favour of assessee, houses were allotted to assessee by housing board, part payment received and possession delivered so as to confer domination over property on assessee whereafter assessee had in its own right allotted quarters to staff and they were being actually used by staff of assessee. assessee was entitled to depreciation in respect of seven houses in respect of which assessee had not obtained deed of conveyance from vendor although it had taken possession and made part payment of consideration. Decision of Karnataka High Court reversed." 18. It will be clear from above that question involved before their Lordship was little different from question involved before us. In above cases, as is clear from underlined portion (italicised in print) of decisions, assessee was in possession of property and was exercising complete domain over property with absolute power of disposal in its own right. Their possession was also protected under s. 53A of Transfer of Property Act. For certain reasons, transfer deed in favour of assessee was not registered. question arose whether in above circumstances, assessee can be treated to be owner under s. 22 of IT Act. Their Lordships of Supreme Court held that when assessee was realizing rent in its own right to exclusion of others, from use of building or thing, then assessee would be treated as owner of property, although he was not legal owner. There was no other beneficial owner of property involved other than assessee. 19. While proceeding to consider application of above rulings, we find that parties here have agreed as under, as per lease deed. dt. 17th Nov., 1998 : "1(a) owner does hereby agree to grant to lessee lease of premises for period and on terms and conditions hereinafter contained. 1(b) That in consideration for grant of lease, lessee shall pay monthly rent of Rs. 20,000 (rupees twenty thousand only) per month for demised premises which will be paid by account payee cheque or by bank draft on or before 7th day of each calendar month with effect from date of commencement of lease in terms of cl. 10 hereunder. 1(c) That lessee has deposited with lessor at time of execution of this agreement Rs. 35,00,000 (rupees thirty-five lakhs only) as interest-free security deposit . 2. That rent reserved herein shall be inclusive of all charges viz. municipal taxes, cess, levies, either statutory or non-statutory and all other outgoings of whatsoever nature and therefore liability to pay taxes on property to municipal corporation and/or other local authorities or otherwise relating to premises shall be of owner but same shall be discharged by lessee for and on behalf of owner against demands/bills raised and shall be debited to account of owner which will be adjusted against rent payable by lessee hereunder. 3. That lessee shall be at liberty to use said premises for itself and for its directors, officers or employees. 4. owner declares that but for rights of Modi Rubber Ltd. as tenant in said property, there is no other encumbrance on demised premises and premises is free from any kind of attachment, judgment or decree and and premises is free from any kind of attachment, judgment or decree and owner agrees and undertakes that during term of agreement owner shall not alienate, surrender or otherwise dispose of property or any part thereof without prior consent of lessee. owner shall not enter into any further agreements or contracts with Modi Rubber Ltd. and shall not extend period of current lease beyond current period and all further correspondence and dealings with Modi Rubber Ltd. shall be only through lessee herein. 5. That water and electricity expenses would be borne by lessee as per bills raised by authorities. 6. That lessee shall be at liberty to sublet premises in whole or in part(s) in favour of any third party and on terms and conditions to be settled by lessee and lessor hereby grants unconditional permission for such sub- letting(s) and ratifies and agrees to ratify all such actions/documents that may be executed by lessee in this behalf as if same had been executed by owner. 7. That lessee shall be entitled to make additions, alterations and modifications as may be required by lessee as per its requirements and to carry out ducting and constructions of cooling towers, lifts etc. at its own cost. lessee shall be entitled to remove and take back all such structure/s at time of expiry of this agreement or at option to leave same behind without any payment in respect thereof. 8. That repairs in demised premises as and when required shall be carried out by lessee at its own cost. 9. That lessor shall not be liable or responsible for any damage/loss to premises on account of any natural calamities and acts of God such as fire, floods or otherwise on account of riots, public violence etc. lease shall not come to end on destruction of property but term of lease shall be determined excluding period during which premises is restored/rebuilt to its original state. lessor shall, therefore, keep premises suitably insured to cover cost of reconstruction and lessee shall be free to reconstruct house at its costs. 10. That lease shall be for period of 9 (nine) years and 11 (eleven) months at first instance with effect from date of lessee securing physical possession of entire premises from owner and/or present tenant, M/s Modi Rubber Ltd. securing of possession from Modi Rubber Ltd. will be sole responsibility of lessee. 11.1 (a) owner hereby authorizes lessee and for said purpose does constitute lessee as its attorney to execute and do all or any of followings : (i) To enter into discussions with M/s Modi Rubber Ltd. for purposes of resolving disputes between owner and said Modi Rubber Ltd. with respect to present period of lease of M/s Modi Rubber Ltd. (ii) To enter into discussions/settlements/arrangement with said M/s Modi Rubber Ltd. with respect to securing vacation of said premises from said M/s Modi Rubber Ltd. either on expiry of period of lease or earlier or thereafter, and on such terms and conditions as may be settled between said M/s Modi Rubber Ltd. and lessee on conditions that no financial liabilities shall be imposed on owner and financial liabilities if any arising on account of compromise/settlement with said M/s Modi Rubber Ltd., shall be paid and discharged by lessee/sub-lessee and lessee shall keep owner indemnified from all claims whatsoever that may be made by Modi Rubber Ltd. (iii) To receive and/or recover monthly rent from M/s Modi Rubber Ltd. and institute suits or legal proceedings including arbitration proceedings against said Modi Rubber Ltd., for purposes of resolving disputes with that company relating to rent and/or period of current lease (which according to owner is due to expire on 14th June, 2004 and according to Modi Rubber Ltd., is due to expire thereafter) and for securing rent and/or vacant possession of premises and to settle/compromise dispute on such terms as lessee may determine. Cost of all legal proceedings shall, however, be borne by lessee and/or its sub-lessee and same shall not be recoverable from owner. (iv) To secure vacant possession of said premises in whole or in part from said M/s Modi Rubber Ltd., pursuant to and in terms of agreement/settlement/compromise that may be arrived at with said Modi Rubber Ltd., and to occupy said premises/part thereof pursuant to and in terms of this agreement as tenant for period stipulated herein and on terms and conditions stated here." facts involved in present case are quite different. Admittedly, Prof. Harnam Singh is owner of property. He has not transferred all his rights to assessee appellant, though some rights are transferred to assessee including right to realize rent. Rights exercised by assessee are referable to agreement with Prof. Harnam Singh. There is no term in deed to show that Prof. Harnam Singh cannot transfer ownership of property or several other rights retained by him as owner. assessee is not doing anything in its own right. He is exercising rights given to him or traceable to documents in his favour. That document is not sale deed nor present case can be treated as case of merely husk of title with Prof. Harnam Singh. He is owner and lessor of property and is realizing rent of same. assessee is also liable to pay rent to Prof. Harnam Singh. He is also to carry other obligations mentioned in deed. tenant can be authorized to sublet premises and realize rent from tenants under him or who has attorned to him. This is quite well known concept. Why such arrangement was arrived at is also explained in deed. appellant in present case is lessee and tenants occupying property are liable to pay rent to assessee as sub-lessees of premises with consent of owner. While Prof. Harnam Singh is owner of property, there cannot be second owner like appellant. It cannot be said that assessee is realizing rent in his own right. There may be cases where lessee can be treated to be owner of property. If lease is for considerable long time, say for 99 years, and lessee has right to construct property and to sell property constructed by him. It is also reasonable to hold lessee to be "deemed owner" of property under s. 27(iiib) of IT Act where lease is not for less than 12 years. legislature having prescribed period of lease for treating lessee as deemed owner, it is not possible to hold lessee as deemed owner where lease is for period of less than 12 years. Nor such lessee can be treated to be beneficial owner. Such interpretation would tantamount to acting against mandate of legislature. It would be illegal application of statutory provision. Having already noted that lease with assessee appellant is for period of less than 12 years, he can neither be treated as beneficial owner nor deemed owner. To hold otherwise would be to disregard agreed terms as well as statutory provisions of Act. We, therefore, do not find any good reason to hold assessee as owner or deemed owner of house property under s. 22 of IT Act. Income realized from sub-lessee in occupation of premises is income of assessee. There is no dispute on this. assessee s contention that above income is to be assessed under head "Other sources" as he is not owner of premises, is well taken and is required to be accepted. There is no question of estimating annual letting value of property. It is to be assessed as per agreements between parties under head "Other sources". Revenue authorities were not justified in assessing rental income under head "House property". On facts of case, we direct AO to take assessee s rental income under head "Other sources". assessee would also be entitled to consequential reliefs under law. This ground of appeal of assessee is accepted. 20. other ground relating to certain expenses claimed by assessee against rental income under head "Other sources" was disallowed as income was taken under head "House property". We have already held that rental income is to be assessed under head "Other sources". Consequently, we direct AO to re-examine issue and allow expenses to assessee as per law. For aforesaid reasons, appeal of assessee is allowed, in terms stated above. *** BINDALS DEVELOPERS (P) LTD. v. INCOME TAX OFFICER