Law: Income Tax Act, 1922

Section: 32

Income-tax-----Depreciation---Owner---Building---Meaning of "owner" ---Ownership of building not conveyed by registered deed to assessee---Assessee entitled to depreciation---Indian Income Tax Act, 1961, S.32. In order to claim the benefit of section 32 of the Income Tax Act, 1961, it is not necessary that the assessee should be a complete owner. The expression "owner" used in section 32 of the Act has been considered by taking into account all its phases and aspects. The owner need not, necessarily, be a lawful owner entitled to pass on the title of the property to another. Held accordingly, that the assessee was entitled to depreciation allowance on the building, the ownership of which was not transferred to the assessee by a registered deed of conveyance. Jodha Mal Kuthiala (R.B.) v. CIT (1971) 82 ITR 570 (SC) applied. CIT v. Sahney Steel and Press Works (P) Ltd. (1987) 168 ITR 811 (AP); CIT v. Shahney Steel and Press Works (P.) Ltd. (1987) 165 ITR 399 (AP); CIT (Addl.) v. U.P. State Agro Industrial Corporation Ltd. (19811 127 ITR 97 (All.) and Madgul Udyog. v. CIT (1990) 184 ITR 484 (Cal.) fol. JUDGMENT K.C. AGARWAL, C.J.--- This reference application under section 256(2) of the Income Tax Act, 1961, has arisen at the instance of the Revenue raising the following question for our opinion: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was entitled to depreciation allowance on the building, the ownership of which was not transferred to the assessee by the registered deed of conveyance?" The facts relevant for appreciating the question are as follows: -- The assessment year involved in the case is 1986-87. The assessment under section 143(3) was completed on September 15, 1986. The Assessing Officer, while completing the assessment under section 143(3), allowed depreciation on the buildings, viz.,(I) Makar Bhavan, Bombay, (2) Blue Garden, Bombay, and (3) Sangam Apartment Bombay. The total depreciation allowed on the three buildings was Rs.4,65,572. The Commissioner of Income-tax, however, considered that the order passed by the Assessing Officer was to the prejudice of the Revenue and,…

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