COMMISSIONER OF INCOME TAX Vs. MIRZA ATAULLAHA BAIG

JUDGEMENT

(1.) BY this reference under S. 256(1) of the IT Act, 1961, the Tribunal, Nagpur Bench, Nagpur, has referred the following two questions of law to this Court for opinion :

(2.) THE assessee was carrying on transport business. He purchased two trucks, namely, Nos. MHB 5375 and MHG 7586, for Rs. 70,000 and Rs. 1,01,388, respectively, during the accounting year. In respect of the first truck, he paid Rs. 35,000 on 12th Oct., 1978, and the balance of Rs. 35,000 on 27th Nov., 1978, by taking a loan from M/s Jaika Automobiles, which was repaid in 15 monthly instalments. The ITO found that four instalments amounting to Rs. 10,000 were paid towards repayment of loan during the previous year. As regards the second truck, Rs. 20,000 were paid by the assessee on 10th May, 1978. The balance of Rs. 81,388 was paid by taking a loan from M/s Telco Limited which was repayable in 34 instalments. During the relevant previous year, the assessee repaid only Rs. 44,000 towards this loan. The trucks were not registered in the assessee's name during the year ending 31st March, 1979, though the assessee was plying the trucks during this period. In the assessment for the asst. year 1980 81, the assessee claimed depreciation in respect of these trucks. The claim was disallowed by the ITO on the ground that the right of full ownership of the trucks had not passed to the assessee and the same remained with the seller till full payment was effected and the transfer registered in the books of the R. T. O. On appeal by the assessee, the AAC reversed the findings of the ITO and allowed the claim of the assessee for depreciation. The order of the AAC was confirmed by the Tribunal on appeal. Under these facts and circumstances, the first question has been referred by the Tribunal at the instance of the CIT.

(3.) SO far as the first question is concerned, from a perusal of the facts of the case, it is clear that the vehicles in question had been purchased by the assessee. The property in the vehicles passed on to the assessee. The fact that the full price was not paid at the time of purchase but only a part was paid and the balance was to be paid in instalments does not militate against the passing of property to the purchaser. The law is well settled that in a case of sale in which the price is to be paid by instalments, the property passes as soon as the sale is made, even though the price has not been fully paid and may later be paid in instalments. So far as the controversy regarding the effect of non registration of the vehicle with the Registering Authority under the motor Vechicles Act in the name of the assessee is concerned, the controversy stands concluded by a judgment of this Bench of our Court delivered on 25th Sept., 1992, in IT Ref. No. 78 of 1983 (CIT vs. Dilip Singh Sardarsingh Bagga (1993) 201 ITR 995), wherein it was held that an assessee, who had purchased the motor vehicle for valuable consideration and used the same for his business, cannot be denied the benefit of depreciation on the ground that the transfer was not recorded under the motor Vehicles Act or that the vehicle stood in the name of the vendor in the records of the authorities under the Motor Vehicles Act. Following this decision, question No. 1 has to be answered in the affirmative and in favour of the assessee.