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TMI Blog2002 (8) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of bottling and marketing of Indian made foreign liquor. The appellant also started the business of manufacturing liquor by taking over the factory at Dera Basti from the Punjab Financial Corporation. By the agreement dated March 26, 1996, an amount of Rs. 7,25,000 was paid on that date and the remaining amount was to be paid in quarterly instalments starting from June 15, 1996, and ending on March 15, 1999. We are told by learned counsel for the appellant, Mr. B. Gupta, that the entire remaining amount has also been paid by the appellant. As per clause I of the agreement the ownership of the factory would remain with the Punjab Financial Corporation till the full consideration was paid. It was also expressly provided in clause V (i) of the agreement that the deed of transfer would be executed by the Punjab Financial Corporation after receipt of full consideration from the appellant-assessee-company. The agreement further provided that the assessee will be holding the property as a trustee till March 15, 1999, on which date the entire sale consideration would have been paid by the assessee. The Assessing Officer, therefore, held that as the assessee was not the owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g regard to the ground realities and further having regard to the object of the Income-tax Act, namely, to tax the income, 'owner" is a person who is entitled to receive income from the property in his own right. The requirement of registration of the sale deed in the context of section 22 of the Income-tax Act, 1961, is not warranted. In this case heavy reliance has been placed on earlier decided case of the Supreme Court in R. B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570. The Supreme Court had occasion to consider the meaning of the words "of which he is the owner". Hegde J., speaking for the Bench, observed that it is true that equitable considerations are irrelevant in interpreting tax laws. But, those laws, like all other laws, have to be interpreted reasonably and in consonance with justice and for determining the person liable to pay tax, the test laid down by the court was to find out the person entitled to that income. While dealing with the concept of possession and enumerating the illustrative cases and rules in this respect, G. W. Paton on Jurisprudence, fourth edition, pages 517-18, says that to acquire possession of a thing it is necessary to exercise such physica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the ownership, dominion or title of property. Parks in Principles and Practice of Valuation states that as for building, depreciation is the measurement of wearing out through consumption, or use, or effluxion of time. Paton has in his Accounts' Handbook (third edition) observed that the depreciation is an out of pocket cost as any other costs. He has further observed that depreciation charge is merely the periodic operating aspect of fixed asset costs. Their Lordships of the Supreme Court in P.K. Badiani v. CIT [1976] 105 ITR 642 observed that the 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. The concept of depreciation suggests that the tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset, is utilising the capital asset and thereby losing gradually investment caused by wear and tear and would need to replace the same by having lost its value fully over a period of time. There cannot be two owners of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 191. In this case Goverdhan Kapoor and Sons, a partnership firm, owned certain assets including immovable property. The firm entered into an agreement of sale with the assessee-company on October 1, 1972, whereby the running business of the vendors was sold to the assessee-company. The assets of the company included the building. During the assessment proceedings, the assessee claimed depreciation under section 32 of the Act on the building which was disallowed by the Income-tax Officer on the ground that the property did not stand in the name of the assessee. The Tribunal held that the assessee was not entitled to depreciation. The court held that an assessee who has the right to enjoy the property for all practical purposes can be treated as its "owner" for the purposes of the provisions of the Income-tax Act. In Dalmia Cement (Bharat) Ltd. v. CIT [2001] 247 ITR 267 (SC), while following the ratio of Mysore Minerals Ltd.'s case [1999] 239 ITR 775 (SC), their Lordships of the Supreme Court observed that the assessee was entitled to depreciation and the reference was decided in favour of the assessee and against the Revenue. Reliance has also been placed on a Division Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness expenditure. The Commissioner of Income-tax (Appeals) has sustained the disallowance which accounts for about five percent of the total claim. The Tribunal observed that "in our opinion, the disallowance of Rs. 75,000 under this head will meet the end of justice. Thus, we confirm the disallowance to the extent of Rs. 75,000 under this head delete the balance amount". It may be pertinent to mention that Mr. Gupta argued that there was no material on record to show that any part of the said expenditure was not for the sales promotion and the Tribunal was, therefore, in error in law in sustaining the disallowance of Rs. 75,000 without any basis. He submitted that the order of the Tribunal regarding sales promotion expenses is based on no material and that is how this becomes a substantial question of law. We have carefully examined the judgment of the Tribunal and there is no material on record to show that any part of the sales promotion expenditure was incurred for non-business purposes. The Tribunal has not given any basis whatsoever while confirming the disallowance to the extent of Rs. 75,000. All that the Tribunal observed was that the disallowance of Rs. 75,000 under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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