Law:

Section:

Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of - Whether, when a person acquires interest, title or ownership in a property subject to right of third party of which he has notice, until such right is enforced transferee continues to be owner of property against whole world - Held, yes - Assessee-company which was carrying on business of leasing and finance, acquired a plant for certain period from a company SIL and leased out same to WIPL - As per agreement, SIL had a right to purchase plant after expiry of stipulated period of time - Assessee claimed depreciation under section 32 - Whether since SIL had not claimed any title or possession over plant nor it had claimed depreciation in respect thereof and neither it had exercised its option to purchase, it could be said that in respect of period covered by financial year under assessment, ownership of assessee in respect of plant could not be disputed for purpose of section 32 and, therefore, assessee was entitled to avail benefit of section 32 - Held, yes FACTS The assessee was carrying on the business of leasing and finance. A company 'WPIL' approached the assessee for lease/finance for a plant which was being set up at the premises of a company named 'SIL'. Pursuant to such approach, the assessee itself acquired the said plant and leased out the same to 'WPIL' upon taking symbolic possession. As per the agreement, 'SIL' had a right to purchase the plant after expiry of a stipulated period of time. In the relevant assessment year, the assessee claimed depreciation under section 32. The Tribunal held that the ownership of the assessee could not be established or accepted because of the reason that there was a stipulation that a third party, other than the lessee to whom the plant was leased out by the assessee, had a right to purchase. On appeal : HELD The depreciation is available on the items mentioned in section 32 on satisfaction of the condition that the plant was owned wholly or partly by the assessee and such plant was used for the purpose of his business. The law is well-settled. The terms 'own', 'ownership' and 'owned' are generic and relative terms having a wide and also a…

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