Law: Income Tax Act, 1961

Section: 32

Income-tax--Depreciation---Condition precedent---Ownership of asset for purposes of business---Meaning of "owner" -Assessee paying full consideration and in exclusive possession and enjoyment of property---Title deed not executed in his favour ---Assessee deemed to be owner of property, entitled to depreciation---Indian Income Tax Act, 1961, S.32. A plain reading of section 32 of the Income Tax Act, 1961, shows that to claim depreciation in respect of buildings, machinery, plant or furniture, they must be owned by the assessee and they must be used by the assessee for the purpose of his business or profession. For purposes of claiming benefit under section 32 of the Income-tax Act, the requirement of ownership by the assessee will be deemed to be fulfilled if the assessee has the dominion and control over the property in his own right. Where the assessee has paid full consideration and has been put in possession of the property and has been in exclusive possession and enjoyment of the property as absolute owner thereof, the mere fact that no title-deed has been executed in his favour, will not deprive him of the right to claim depreciation under section 32. The assessee purchased flats but the conveyance deed was not executed in its favour. It claimed depreciation on the said flats under section 32 of the Act. The claim was disallowed by the Income-tax Officer. On appeal, the Commissioner of Income-tax (Appeals) accepted the plea of the assessee and granted depreciation. The Tribunal confirmed the order of the Commissioner of Income-tax. On a reference: Held, that as the assessee was exercising rights of ownership in its own right as owner of the property in question, the Tribunal was justified in holding that the assessee was entitled to depreciation under section 32. CIT (Addl.) v. U.P. State Agro Industrial Corporation Ltd. (1981) 127 ITR 97 (All.); CIT v. Sahney Steel and Press Works (P.) Ltd. (1987) 168 ITR 811 (AP) and CIT v. Tamil Nadu Small Industries Development Corporation Ltd. (1991) 190 ITR 655 (Mad.) fol. JUDGMENT SYED SHAH MOHAMMED QUADRI, J.---The following question is teferred to this Court for opinion, at the instance of the Revenue; under…

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