Law:

Section:

Section 10(2)(vi) of the Indian Income-tax Act, 1922 [corresponding to section 32 of the Income-tax Act, 1961] - Depreciation - Allowance/Rate of - Assessment years 1951-52 to 1956-57 - Whether depreciation under section 10(2)(vi) is admissible only where assessee is owner of property - Held, yes FACTS For the assessment years 1951-52 to 1956-57, the assessee-firm claimed depreciation in respect of certain buses owned by individual members. The department disallowed the assessee's claim, treating the assessee as an unregistered firm. On second appeal, the Tribunal assessed the income of the assessee taking into consideration the depreciation that might have been suffered by the buses as a result of their constant plying. On reference: HELD It is now well decided that depreciation under section 10(2)(vi ) is admissible only where the assessee is the owner of the property. It is inadmissible where the assessee has owned only a part of machinery or other property. In the instant case, the Tribunal had found that the buses were not owned by the assessee. If so, the Tribunal was not justified in taking into consideration the depreciation suffered by the buses while determining the net income of the assessee. JUDGMENT Reddy, CJ.-The Tribunal, Allahabad, has referred the following question under section 256(2) of the Income-tax Act, 1961 ('the Act') at the instance of the revenue: "Whether, on the facts and in the circumstances of the case, was the Tribunal, in law, justified in taking into consideration the depreciation suffered by the buses in question in estimating the net taxable income?" 2. The respondent-assessee did not file any returns for the assessment years 1951-52 to 1956-57. However, on the basis of certain material the ITO initiated proceedings under section 34 of the Indian Income-tax Act, 1922. In response thereto the assessee filed 'nil' return, wherein it was claimed that the buses belonged to the members individually and that no income arising from the plying of those buses was assessable in the hands of the assessee. Its case was that the income of each bus should be assessed separately in the hands of its respective owner. This case was, however,…

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