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Issues Involved:
The issue involves the interpretation of the term "owned by the assessee" in section 32(1) of the Income-tax Act, 1961, specifically in relation to claiming depreciation on a factory building used for business purposes. Judgment Details: Assessment of Depreciation Claim: The assessee claimed depreciation under section 32 of the Act on a building acquired from a partnership firm, despite the property not being transferred in the name of the assessee due to lease restrictions. The Appellate Assistant Commissioner allowed the claim, noting the building's inclusion in the balance sheet and its use for business purposes. However, the Tribunal reversed this decision, emphasizing the requirement that the building must be "owned by the assessee" for depreciation claim eligibility. Interpretation of "Owned by the Assessee": The Tribunal held that the assessee must have unobstructed title to the building to claim depreciation under section 32(1). The Tribunal emphasized that mere beneficial or constructive ownership is insufficient without legal title transfer. The Tribunal's decision was based on the specific language of the statute, requiring unambiguous ownership for depreciation claims. Legal Interpretations and Precedents: The assessee argued that the term "owned" should be interpreted based on the Supreme Court's decision in CIT v. Podar Cement Pvt. Ltd., which defined ownership in the context of income receipt rights rather than formal title transfer requirements. The Revenue contended that ownership includes the right to dispose of the property, citing previous court decisions to support their position. Court's Interpretation and Ruling: The High Court analyzed the term "owner" in sections 22 and 32(1) of the Act, emphasizing the right to enjoy the property as crucial for ownership determination. The Court rejected the Revenue's argument that the right to dispose of the property is essential for ownership. Relying on statutory interpretation principles and the Supreme Court's decision in Podar Cement's case, the Court ruled in favor of the assessee, allowing depreciation claim based on effective possession and use of the property for business purposes. Supporting Precedent and Conclusion: The Court cited the Supreme Court's decision in Mysore Minerals Ltd. v. CIT to reinforce the broader interpretation of ownership under section 32(1). The Court concluded that the assessee was entitled to claim depreciation on the factory building used for business purposes, even without a formal deed of title transfer. The judgment favored the assessee, allowing the depreciation claim under section 32 of the Income-tax Act, 1961.
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