Ownership of superstructures under a lease deed may exist separately from land despite restraints on alienation.

A lease deed can transfer ownership of existing structures separately from the land, so the lessee may be treated as owner for income-tax purposes. Reading the deed as a whole, the court found that the lessor intended to pass the old superstructures to the lessee for consideration while retaining the land, and clauses on compensation, reconstruction, repair, inspection, nuisance, and assignment were consistent with that construction. A contractual restriction on alienation did not prevent ownership under the relevant tax provision. The assessee company was therefore correctly assessed on the existing structures, and the answer was in favour of the Revenue.

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Issues: Whether, on a proper construction of the lease deed dated 14 February 1948, the assessee company was the owner of the existing structures and was therefore correctly assessed under section 9 of the Income-tax Act, or whether the income was assessable under section 12.

Analysis: The deed, read as a whole, showed that the lessor intended to transfer the existing structures to the lessee for consideration, while retaining ownership of the land. The recitals and the clauses dealing with purchase money, compensation on compulsory acquisition, and the separate treatment of the old structures and the land supported that construction. Clauses relating to reconstruction, repair, inspection, nuisance, restriction on assignment, and reservation of rights in favour of the lessor were held to be consistent with the lessee's ownership of the old structures, since they were directed mainly to the new buildings to be erected under the lease or to protective rights of the lessor. A restriction on alienation did not prevent the lessee from being treated as owner within section 9.

Conclusion: The assessee company was the owner of the existing structures for purposes of section 9, and the assessment under section 9 was correct; the answer was in favour of the Revenue.

Ratio Decidendi: Ownership for the purpose of section 9 can exist in respect of superstructures separately from the land, and contractual restraints on transfer do not negate such ownership where the lease deed otherwise effects a transfer of the structures.

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