TMI Blog1997 (7) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... n its six units on the capital employed without reducing the same by the amount of loans raised from the head office. We take the second question for consideration at first. This question arises in ITA No. 3 of 1997. The Tribunal in its order has discussed the facts at length in paragraphs 21 to 25. At the end of the discussion, the Tribunal has found as a fact that the Departmental representative has not been able to show any nexus between the loans raised by the head office and the loans utilised by the various units and that in the absence of such nexus, the loans of the head office on a pro rata basis cannot be reduced from the assets of the units to arrive at the capital employed by such units. On that footing, the Tribunal has rejected the contention of the Revenue and upheld the order of the Commissioner of Income-tax. The question depends upon the finding of fact arrived at by the Tribunal and thus no question of law arises. Hence, the application by the Revenue for referring the second question cannot be accepted. Turning to the first question, the relevant facts as available from the records are that the two transformers were the property of the H. P. State Electricit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery on the condition that the Government of India would recover the total cost of machinery from the monthly bills submitted by the assessee and till the completion of the contract, the Government would have permanent lien on the machinery. The machinery was to be transferred to the assessee on the completion of the contract. The Income-tax Officer disallowed the claim of the assessee for deduction of depreciation on the ground that the assessee was not the legal owner of the machinery. The Appellate Assistant Commissioner and the Tribunal held that the assessee was the owner of the machinery and was entitled to the deduction. On a reference, the Calcutta High Court held that the expression "owner" had different meanings in different contexts and the owner need not always have the complete user or right of full ownership at all times. On the facts of that case, the Calcutta High Court held that the machinery was being used by the assessee and it was shown as its assets in its balance-sheet and, therefore, the assessee was entitled to get depreciation deducted under section 32 of the Act. The Calcutta High Court has made a reference to the decision of the Supreme Court in R. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , not on behalf of the owner but in his own right... 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. An attempt was made by Mr. Mahajan to distinguish this case on the ground that under the corresponding English statute the liability to tax in respect of income from property is not laid on the owner of the property... But the real question is, can that right be considered as ownership within the meaning of section 9 of the Act. As mentioned earlier the section seeks to bring to tax income of the property in the hands of the owner. Hence, the focus of that section is on the receipt of the income. The word 'owner' has different meanings in different contexts. Under certain circumstances a lessee may be considered as the owner of the property leased to him. In Stroud's Judicial Dictionary, 3rd edition, various meanings of the word 'owner' are given. It is not necessary for our present purpose to examine what the word 'owner' means in different contexts. The meaning that we give to the word 'owner' in section 9 must not be such as to make that provision capable of being made an instrument of oppressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1968, and as it could not exercise any rights in respect thereof and that in view of the capital structure of the corporation, constitution of its board of directors and the fact that the corporation was in possession of the properties, it could, for the purposes of section 32, be held that the properties were owned by the corporation and it is entitled to claim depreciation with respect to them. The reasoning of the Allahabad High Court will apply on all fours in the present case. The property has been put into the possession of the assessee and it is being used fully by the assessee as such. It cannot be dealt with thereafter by the Himachal Pradesh State Electricity Board and, therefore, for the purpose of section 32, the assessee can be considered to be the person, who owned the machinery. The learned Advocate-General draws our attention to the judgment of the Supreme Court in Seth Banarsi Dass Gupta v. CIT [1987] 166 ITR 783. The assessee and five of his brothers were partners in a firm each having 1/6th share. Two of the brothers leased out their respective shares to the assessee on an annual payment but the leases were cancelled, each undertaking to pay the assessee cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of ownership of the railway siding though available for use by the assessee for its business of manufacture. It could not be taken to be an asset, which is depreciable. The court observed that the interest consisted merely of the right to use the railway siding and the assessee cannot be entitled either to depreciation or development rebate on the railway siding, which, in any case, remains the property of the Railways subject to the subordinate interest of the assessee in the use of it and that such interest was not depreciable. It is also held that the railway siding cannot be said to be the asset of the assessee eligible for development rebate. The ruling cannot apply to the facts of the present case as the Himachal Pradesh State Electricity Board has parted with the machinery to the assessee on receipt of full cost of consideration and it is not as if the Himachal Pradesh State Electricity Board retained the ownership and only conferred a right to use on the assessee as such. Under section 256(2) of the Income-tax Act, the High Court may if it is not satisfied with the correctness of the decision of the Appellate Tribunal require the Appellate Tribunal to state the case a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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