Kerala High Court
Commissioner Of Income-Tax vs Nidish Transport Corporation on 9 March, 1989
Equivalent citations: [1990]185ITR669(KER)
Author: K.S. Paripoornan
Bench: K.S. Paripoornan
JUDGMENT K.S. Paripoornan, J.
1. These three references are at the instance of the Revenue. The respondents are assessees under the Income-tax Act (in short, "the Act"). In Income-tax References Nos. 41 and 42 of 1983, the respondent is the same assessee. Therein, the assessment years involved are 1976-77 and 1977-78. In Income-tax Reference No. 148 of 1983, the assessee is a different person. The assessment year is 1977-78.
2. We heard counsel. The sole question that arises in these three cases is whether the assessees are entitled to depreciation on certain vehicles used by them in their business. Though the vehicles were purchased by the assessees during the relevant previous years, they have not been transferred in the assessees own names in the certificate of registration. On this ground, the assessees were denied the depreciation allowance for the vehicles. In appeal, the Appellate Assistant Commissioner held that the assessees had become the de facto owners of the vehicles during the relevant previous years and so they are entitled to depreciation on those vehicles. The Appellate Tribunal concurred with the said view and dismissed the appeals filed by the Revenue. Thereafter, at the instance of the Revenue, the Appellate Tribunal has referred the following common questions of law in the three cases for the decision of this court:
"(1) Whether, on the facts and in the circumstances of the case, the assessee is the owner of the vehicles ? (2) Whether, on the facts and in the circumstances of the case, the assessee is entitled to depreciation on the buses ?"
3. Counsel for the Revenue argued that till transfer of ownership is effected in the certificate of registration, the assessees cannot be considered to be owners and so depreciation in respect of the machinery or plant cannot be claimed. It is submitted that the machinery or plant should be owned by the assessee and used by him for the purpose of the business. In these cases, till the registration is transferred in the names of the assessees, the assessees cannot be considered to be owners. They are not entitled to get depreciation. Reliance was placed on Section 31 of the Motor Vehicles Act, 1939, which deals with transfer of ownership. We are of the view that the reliance placed on Section 31 of the Motor Vehicles Act is misplaced. The transfer of ownership of the vehicles is not a matter governed by the provisions of the Motor Vehicles Act. A motor vehicle is movable property. The transfer of ownership thereof is governed by the Sale of Goods Act. Transfer takes effect from the date of sale. As between the transferor and the transferee, the sale is complete even before the transfer is effected in the registration certificate. The failure to report the same to the registering authority may entail levy of penalty prescribed under Section 31 of the Motor Vehicles Act or Section 112 of the Act. Beyond that, it does not affect the passing of title. Law is fairly clear that registration is not necessary to pass title in the motor vehicle. The decisions of the Supreme Court in Panna Lal v. Chand Mal, AIR 1980 SC 871 ; [1980] ACJ 233 and the decisions of this court in Aliyar Kunju v. Subair Khan [1984] KLT 268, Kunjuraman v. Saramma [1986] KLT 742 and M. Swaminathan v. C.K. Jayalakshmi Amma [1989] 66 Comp Cas 503 ; [1987] 2 KLT 292, establish that for the transfer of ownership of a motor vehicle, mutation of the same in the certificate of registration is not necessary and the vehicle can be sold and purchased without following the procedure prescribed under Section 31 of the Motor Vehicles Act. In the light of the above decisions, we are of the view that the Appellate Tribunal was justified in holding that the asses-sees who purchased the vehicles and used them during the relevant previous years are entitled to the depreciation allowance. The assessees were, no doubt, the owners of the vehicles. They used the vehicles for their business and they are entitled to depreciation on the buses. We, therefore, answer both the questions referred to us in both the cases in the, affirmative, against the Revenue and in favour of the assessees.
4. In this connection, we may also state that for the earlier year, the motion made by the Revenue in this court to refer an identical question of law for the decision of this court was dismissed in Original Petition No. 8508 of 1983 by judgment dated January 17, 1985.
5. A copy of this judgment under the seal of this court and the signature of the Registrar will be sent to the Income-tax Appellate Tribunal, Cochin Bench.