TMI Blog1999 (8) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... claim depreciation under the provisions of section 32 of the Income-tax Act, 1961, in respect of factory building belonging to it and used by it for its business ?" 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 assessee went in appeal. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it does not become the owner of the building because till the assessee has unobstructive title to that building it has no right of disposition or alienation of that building. As we are of the view that the building is not owned by the assessee, the assessee is not entitled to the depreciation on the building. We reverse the order of the Appellate Assistant Commissioner and restore that of the Income-tax Officer. In view of the fact that we are of the view that the provisions of section 32(1) are specific, we need not go into the case law relied upon by learned counsel for the assessee which is otherwise not relevant to the issue," Learned counsel for the assessee has submitted that though the phrase used in section 32(1) is "owned by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e" as used in section 32(1) of the 1961 Act. It was held that in the absence of a sale deed executed in accordance with law, the assessee could not be treated as owner of the property and, therefore, it did not satisfy the condition under section 10(2)(vi) of the 1922 Act, and was, therefore, not entitled to depreciation in respect of the property. This judgment was followed in another decision of this court in Sushil Ansal v. CIT [1986] 160 ITR 308, wherein section 22 of the 1961 Act which contains provision for assessment of income from house property, came up for consideration, The relevant phrase used in section 22 is "of which the assessee is the owner". The assessee had purchased certain flats in a building. He had obtained possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty. Learned counsel for the assessee argued that the decision of this court in Sushil Ansal's case [1986] 160 ITR 308 was specifically overruled by the Supreme Court in CIT v. Podar Cement Pvt. Ltd. [1997] 226 ITR 625. In Podar Cement Pvt. Ltd.'s case [1997] 226 ITR 625 (SC), section 22 of the 1961 Act came up for consideration and it was held that execution of sale deed was not a sine qua non for invoking of the provisions of section 22. In Sushil Ansal's case [1986] 160 ITR 308, this court had followed its earlier decision in Hindustan Cold Storage's case [1976] 103 ITR 455. Since Sushil Ansal's case [1986] 160 ITR 308 (Delhi) has been overruled, it was argued that the decision in Hindustan Cold Storage's case [1976] 103 ITR 455 (Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified period, a formal sale deed cannot be executed in favour of the assessee with respect to the property. We are unable to agree with the contention of learned counsel for the respondent that since the assessee does not have a right to dispose of the property, it is not entitled to claim depreciation under section 32(1) of the Act. The principles of statutory interpretations support the view that we are taking in this behalf. This interpretation advances the object of the provision. Secondly, this interpretation also upholds the principle that in taxing statutes, when there is need for interpretation, it should be in a manner favouring the assessee. In Podar Cement's case [1997] 226 ITR 625, the Supreme Court explained that though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cument of title in his favour, a person cannot be said to be the owner of a property for purposes of section 22 or 32(1) of the 1961 Act. As observed by the Supreme Court, the Income-tax Act, is concerned with the provisions regarding taxing of income and, therefore, the income or benefit derived from a property by an assessee should really be the concern for purposes of the provisions of this Act. In the context of these provisions the right to alienate the property is secondary. An assessee who has the right to enjoy the property for all practical purposes can be treated as its owner for purposes of these provisions of the Act. The view that we have taken finds supports from a recent decision of the Supreme Court in Mysore Minerals Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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