TMI Blog2005 (8) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal that your petitioner was not the owner of the said plant is perverse having been arrived at by ignoring the relevant materials and taking into consideration irrelevant and extraneous considerations and such finding is otherwise arbitrary? (2) Whether the Tribunal having found that the lease dated December 30, 1994 was not a colourable transaction and was legally valid could hold that your petitioner was not the owner of the said plant? (3) Whether the Tribunal could hold that your petitioner was not the owner of the said plant and was not entitled to depreciation thereon when neither WPIL nor SIL claimed any ownership of the said plant and claimed any depreciation thereon? (4) Whether the claim for depreciation on the said plant could be denied when the rental income therefrom was assessed? Section 32: Own : Ownership : Meaning of: The question is dependent on the interpretation of section 32 of the Income-tax Act, 1961 allowing depreciation to an assessee. The depreciation is available on the items mentioned in section 32 on satisfaction of the conditions that the plant was owned wholly or partly by the assessee and such plant was used for the purpose of his bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be given a wider meaning. See Addl. CIT v. U.P. State Agro Industrial Corporation Ltd. [1981] 127 ITR 97 (All); CIT v. Steelcrete (P.) Ltd. [1983] 142 ITR 45 (Cal); CIT v. Shahney Steel and Press Works (P.) Ltd. [1987] 165 ITR 399 (AP) and CIT v. Sahney Steel and Press Works (P.) Ltd. [1987] 168 ITR 811 (AP). A Division Bench of this court in CIT v. General Marketing and Manufacturing Co. Ltd. [1996] 222 ITR 574, relying on the decisions of the apex court in R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 and CIT v. Sahney Steel and Press Works (P.) Ltd. [1987] 168 ITR 811 (AP) held that the Allahabad High Court in a decision in the case of Addl. CIT v. U.P. State Agro Industrial Corporation Ltd. [1981] 127 ITR 97, dealing with the expression "owned" for claiming the benefit of section 32 of the Act held that it was not necessary that the assessee should be a complete owner. By the words "complete owner", the Allahabad High Court meant, that title must have passed to the person claiming the benefit in the manner the law requires it to be. If an assessee is using a property otherwise also it can get its benefit. The court held that an assessee is nothing but the owner for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such approach the assessee itself acquired the said plant and leased out the same to WPIL upon taking symbolic possession. Admittedly this was a movable property for which delivery of possession was not material, as was rightly held by the learned Tribunal. According to the terms of the agreement between SIL and WPIL, SIL had a right to purchase the plant after the expiry of a stipulated period of time. The learned Tribunal had held that this right to purchase by SIL hits the ownership claimed by the assessee. Whether the transaction between the assessee and WPIL was a lease or finance: Admittedly, the assessee carried on business of leasing and finance. The question remains as to whether in this case it was a lease or not. In CIT v. Shaan Finance (P.) Ltd. [1998] 231 ITR 308 (SC), cited by Mr. Bajoria, it was held that a leasing or finance company, which owns machinery and leases it to third party, who uses the machinery for manufacture of articles or things, (the company) is entitled to investment allowance in respect of such machinery under section 32A. Admittedly, identical ingredients of ownership and user for the purpose of business, as are required for the purpose of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase the plant after the alleged stipulated finance, as found in fact by the learned Tribunal, the assessee was the owner of the property. In other words the learned Tribunal, on the facts, found that the assessee was the owner of the plant but for the alleged right of the SIL to purchase the plant after the expiry of the alleged stipulated time. Whether the assessee is the owner of the plant: The question now relates only to the ownership. We may deal with the question having reference to the Sale of Goods Act under which the transaction acquiring the ownership of the plant, a movable property, is governed. The provisions of section 53A and section 40 of the Transfer of Property Act, 1882 (the TP Act), have been compared and contrasted for the purpose of drawing a comparison to illustrate the conferment of title or ownership. Mr. Shome disputed the same on the ground that the plant being a movable property reference to those provisions would be wholly misplaced. The submission of Mr. Shome might have some substance so far as the applicability of the provisions of the TP Act is concerned since it does not apply to movable property. But that does not preclude the court from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, 24, 25, 27 and 28 of the Sale of Goods Act. In Raja Baldeodas Birla Santatikosh v. CIT [1991] 190 ITR 578, this court dealing with void and voidable transaction had held that there is a distinction between the two and such distinction is a fundamental one, though it is often obscured by carelessness of language. Something, which is void from the beginning, is of no legal effect at all and such void transfers would not affect any person's right whether he was a party or a stranger to the transaction. Whereas a voidable act on the contrary takes its full and proper legal effect unless and until it is disputed and set aside at the instance of some person entitled to do so. In the said decision in Raja Baldeodas Birla Santatikosh [1991] 190 ITR 578 (Cal)) it was held: "That the assessee-trust had no implied power to donate any of its assets. The shares received by the assessee had not been given for any specific purpose and there was no trust within trust. However, the donation of shares was not void but voidable. The transfer of the shares by the assessee-trust to the donee-trust was consented to by the major beneficiaries of the assessee. Although the consent on behalf of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment as was sought to be done by the Assessing Officer. The interest part was required to be segregated. There being no agreement for payment of interest and/or the rate of interest, it is not possible to calculate the rate of interest. It has been brought to our notice by way of an additional paper book that on account of default on the part of WPIL to pay the rental the assessee had filed a suit in the Bombay High Court in which a receiver has been appointed. The court receiver has taken possession of the said plant and an undertaking has been given on behalf of SIL that SIL will preserve the possession of the receiver carefully and they will execute an agency agreement with the receiver and that they will not part with possession nor mortgage nor alienate nor encumber nor create any third party interest and have further undertaken to cover the said plant by insurance, etc. However SIL had not claimed any title or possession over the plant nor it had claimed depreciation in respect thereof. Neither it had exercised its option to purchase. Therefore, in respect of the period covered by the financial year under assessment the ownership of the assessee in respect of the plant ..... 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