Registration requirement for immovable transfers prevents equitable doctrines creating legal title, so vendor was not owner for tax assessment.

Whether the company remained owner for income-tax assessment turned on property-transfer formalities and effect of unregistered instruments; the court applied the statutory rule that transfers of tangible immovable property require registration and that defensive equitable rights cannot create legal title where registration is mandatory, limiting the application of English equitable lease doctrines. The sample flat agreements operated as assignments of the company's undivided interests and conferred sale/assignment rights on purchasers, leaving the company without ownership during the relevant years; outcome: the company was not owner and not assessable under section 9 for those years.

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Issues: Whether, on the facts and in the circumstances of the case, Messrs. Modern Flats Private Ltd. are liable to be assessed under section 9 of the Income-tax Act, 1961 as the owner of the building for the assessment years 1954-55 to 1958-59.

Analysis: The Court examined the original licence dated 2 June 1948, the subsequent unregistered assignments (4 January 1951 and 9 January 1951) and the sample flat-purchase agreement (29 January 1951). Under section 54 of the Transfer of Property Act, 1882 a transfer of tangible immovable property cannot be effected by an unregistered instrument; section 53A provides only a limited defensive equity and cannot create title where registration is required. The licence contemplated a lease only upon completion and certification, but English equitable doctrines (Walsh v. Lonsdale) cannot override the express statutory regime under the Transfer of Property Act as applied in India. Further, the sample flat agreements on their terms assigned the undivided interest and rights of the company in respect of each flat to purchasers and conferred upon purchasers the right to sell or assign their acquired interests; restrictive covenants in those agreements were for common management and did not preserve ownership in the company. Given that the company purported to transfer its entire rights to individual flatholders by those agreements, the company retained no ownership in the property during the relevant years.

Conclusion: The assessee, Modern Flats Private Ltd., was not the owner of the building for the assessment years 1954-55 to 1958-59 and therefore is not liable to be assessed under section 9 of the Income-tax Act, 1961 for income from that property; the reference is answered in the negative.

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