TMI Blog1999 (1) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... un., 1985. The said property was included in the gross block of the assessee and the same was reflected in the accounting year ending on 30th June, 1986. According to the AO at the relevant time the assessee was not the owner of the factory building and, therefore, he has held that the assessee was not entitled for depreciation on the factory building. The AO further held that the factory building being immovable property was not registered in the name of the assessee and as such there was no transfer of ownership of the immovable property to the assessee. In that view of the matter, it was concluded by the AO that if the immovable property is not registered in the name of the assessee, the assessee would not be entitled for depreciation. 4. Aggrieved by the order of the AO, the assessee preferred an appeal, before the CIT(A). It was contended by the assessee before the CIT(A) that the AO was not justified in refusing to allow depreciation on the factory building. The assessee had cited the following decisions in support of its claim before the appellate authority below.: (i) CIT vs. Sahney Steel Press Works Ltd. (1987) 63 CTR (AP) 275 : (1987) 168 ITR 811 (AP); (ii) CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's counsel, their Lordships of the Andhra Pradesh High Court considered the decision of the Supreme Court in Sir Mir Osman Ali Khan vs. CWT and observed that that case concerns the question of liability to wealth-tax of certain properties belonging to the Nizam of Hyderabad and the earlier ruling of the Supreme Court in R.B. Jodhamal Kuthiala vs. CIT (1971) 82 ITR 570 (SC) was also referred to in Nawab Sir Mir Osman Ali Khan's case, but the statement of law contained therein was neither disapproved nor departed from. Therefore, their Lordships held that it was not possible for them to depart from the principles laid down by the Supreme Court in R.B. Jodha Mal Kuthiala vs. CIT, while interpreting the meaning of the expression 'owner' occurring in s. 22 of the IT Act, 1922, for the purpose of determining the question whether the assessee is entitled to claim depreciation under s. 32(1) of the IT Act. Thus, their Lordships held that the assessee is entitled to depreciation on the building purchased and used by it for the purpose of its business even though registered conveyance deed in respect of the building had not been effected during the relevant previous year. Respectfully fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of hearing of the appeals, Shri Shah also invited our attention to the provisions of cl. (v) of s. 2(47) and sub-s. (iiia) of s. 27 of the Act. In view of these provisions the learned counsel for the assessee submitted that w.e.f. 1st April, 1988, a person who comes to have control over the property in part-performance of a contract of the nature referred to in s. 53 of the Transfer of Property Act, 1882 or by virtue of such transactions as are referred to in cl. (f) of s. 269UA will be deemed to be owner of the property. According to the learned counsel for the assessee, however, the legislature had simultaneously not amended the provisions of s. 32 of the Act. He further contended that it is clear from the provisions of cl. (v) of s. 2(47) and sub-s. (iiia) of s. 27 of the Act that where an assessee has acquired a building in part-performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act and sale deed has not yet been registered in his name, is liable to income-tax. He further contended that if the assessee had earned rental income and it would not be logical and reasonable to deny him the benefit of depreciation allowance if he uses the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cument of title—that title must have passed to the person claiming the benefit in the manner the law requires it to be. If an assessee is the person using a property otherwise also it can get its benefit. The Court held that an assessee is nothing but the owner for the purpose of s. 32 of the Act even if it is not the owner enjoying the lawful title by obtaining a document. The Calcutta High Court was called upon to consider a similar controversy in the case of Madgul Udyog vs. CIT (1990) 184 ITR 484 (Cal). The Calcutta High Court agreed with the decision of the Allahabad High Court as above and also relied on the Supreme Court decision in the case of R.B. Jodha Mal Kuthiala vs. CIT (1971) 82 ITR 570 (SC). The view was that for all intents and purpose the person who is in possession of the property which is saved by s. 53A of the Transfer of Property Act was entitled to get the benefit of s. 32 of the IT Act. This decision took into consideration, s. 9 of the old IT Act (which is equivalent to s. 32 of the new Act). Reliance was also placed to another decision of the case of CIT vs. Sahney Steel and Press Works (P) Ltd. (1987) 63 CTR (AP) 275 : (1987) 168 ITR 811 (AP). This was the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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