TMI Blog1999 (9) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee made a claim under section 32 of the Income-tax Act, 1961, in respect of depreciation of buildings used for the purpose of the business of the assessee, The claim was rejected by the Assessing Officer forming an opinion that the assessee had not become owner for want of deed of conveyance in its favour. The Commissioner of Income-tax allowed the appeal preferred by the assessee and directed the Assessing Officer to allow the assessee's claim for depreciation inasmuch as the company was acting as the owner and could exercise the rights of the owner qua the houses. The Tribunal in an appeal preferred by the Revenue set aside the decision of the Commissioner of Income-tax. On an application under section 256(1) of the Act filed by the appellant, the following question was referred by the Tribunal for the opinion of the High Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the claim of the assessee for depreciation in respect of the seven houses in respect of which the assessee has not obtained a deed for conveyance from the vendor although it had taken possession and made part payment of the consideration ?" The H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eric and relative terms. They have a wide and also a narrow connotation, The meaning would depend on the context in which the terms are used Black's Law Dictionary (6th edition), defines "owner" as under : "Owner, The person in whom is vested the ownership, dominion, or title of property ; proprietor. He who has dominion of a thing, real or personal, corporeal or incorporeal, which he has a right to enjoy and do with as he pleases, even to spoil or destroy it, as far as the law permits, unless he be prevented by some agreement or covenant which restrains his right. The term is, however, a nomen generalissimum, and its meaning is to be gathered from the connection in which it is used, and from the subject-matter to which it is applied. The primary meaning of the word as applied to land is one who owns the fee and who has the right to dispose of the property, but the term also includes one having a possessory right to land or the person occupying or cultivating it. The term 'owner' is used to indicate a person in whom one or more interests are vested for his own benefit . . . ." In the same dictionary, the term "ownership" has been defined to mean, inter alia, a "collection o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is the owner". This court upon a juristic analysis of the underlying scheme of the Act and resorting to contextual and purposive interpretation, also having reviewed several conflicting decisions of different High Courts, held that the liability to be assessed was fixed on a person who receives or is entitled to receive the income from the property in his own right. Vide para. 55, this court has held : "We are conscious of the settled position that under the common law, 'owner' means a person who has got valid title legally conveyed to him after complying with the requirements of law such as the Transfer of Property Act, Registration Act, etc. But, in the context of section 22 of the Income-tax Act, having regard to the ground realities and further having regard to the object of the Income-tax Act, namely, 'to tax the income', we are of the view, 'owner' is a person who is entitled to receive income from the property in his own right." In R. B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (SC), it was held for the purpose of section 9 of the Indian Income-tax Act, 1922, that the owner must be the person who can exercise the rights of the owner, not on behalf of the owner but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rising from age, use, and improvements, due to better methods. A decline in value of property caused by wear or obsolescence and is usually measured by a set formula which reflects these elements over a given period of useful life of property .... Consistent, gradual process of estimating and allocating cost of capital investments over estimated useful life of asset in order to match cost against earnings . . ." Parks in Principles and Practice of Valuation (fifth edition, at page 323) states : As for building, depreciation is the measurement of wearing out through consumption, or use, or effluxion of time. Paton has in his Account's Handbook (third edition) observed that depreciation is an out of pocket cost as any other costs. He has further observed---the depreciation charge is merely the periodic operating aspect of fixed asset costs. In Badiani P. K. v. CIT [1976] 105 ITR 642, the Supreme Court has observed that allowance for depreciation is to replace the value of an asset to the extent it has depreciated during the period of accounting relevant to the assessment year and as the value has, to that extent, been lost, the corresponding allowance for depreciation takes place ..... X X X X Extracts X X X X X X X X Extracts X X X X
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