Law: Income Tax Act, 1961

Section: 32,22

(a) Income-tax-----Depreciation---"Owner", meaning of---Person who receives income from asset in his own right entitled to allowance---Legal ownership not condition in such a case---Refusal to grant depreciation solely for failure to produce registered sale-deed---Not justified---Matter remanded---Indian Income Tax Act, 1961, S.32. A person entitled to receive the income from property of which he is not a complete legal owner, but who receives the income in his own right is liable to tax on the income so received. It is but logical that such a person should also be entitled to claim depreciation in respect of the property of which he is not a complete owner but from which he receives the income in his own right. The meaning of the term "owner" in section 32 of the Income Tax Act, 1961, cannot be any different from what it is for the purpose of section 22. The object of the Act is to tax the income. The manner of computation of income is laid down in the Act. Under section 32 depreciation is one of the items to be considered in computing income. The allowance permitted under that provision is available to the person whose income is sought to be taxed. A person cannot be held to be an owner for the purpose of taxing his income under section 22 even when he is not the complete owner but be denied the benefit of depreciation under section 32 by restricting the meaning of the term "owner" in section 32 to persons who are complete legal owners: Held, accordingly, that the Tribunal was not right in disallowing the depreciation claimed in respect of the building under the provisions of section 32 of the Income-tax Act, on the sole ground that the assessee did not produce the registered sale-deed. Matter remanded. CIT v. Podar Cement (P.) Ltd. (1997) 226 ITR 625 (SC) explained and applied. CIT v. Tamilnadu Agro Industries Corporation Ltd. (1987) 163 ITR 61 (Mad.) held no longer good law. (b) Income-tax--- ---Capital or revenue expenditure---Sum paid as compensation to vendor against undertaking not to market milk in Madras city---Enduring benefit to assessee---Capital expenditure---Indian Income Tax Act, 1961. The sum paid to the Madras Cooperative Milk Supply Union was…

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