1996 (8) TMI 43 - HC - Income Tax

Summary

Issues Involved:
The issue involves the entitlement to depreciation under section 32 of the Income-tax Act for a flat not transferred in the name of the assessee.

Judgment Details:

The question referred to the court was whether the assessee was justified in claiming depreciation under section 32 of the Income-tax Act for a flat not transferred in its name. The Tribunal confirmed the order granting depreciation to the assessee, which was challenged by the Revenue.

The contention of the Revenue was that ownership by the assessee is a prerequisite for claiming depreciation under section 32 of the Act. The Revenue argued that since the title of the flats was not conveyed to the assessee, depreciation should not have been granted.

The court examined the requirement of ownership under section 32 and emphasized that ownership is deemed fulfilled if the assessee has dominion and control over the property, even without a title deed, as long as the assessee has paid full consideration, is in possession, and enjoys the property as an absolute owner.

In a similar case, the Allahabad High Court held that possession and control over the property, along with performance of contractual obligations, can establish ownership for claiming depreciation under section 32. The court clarified that the assessee can dispose of the property and realize income from it, even without the ultimate title being vested.

Another case before the High Court involved a situation where the conveyance deed for a building was not registered, yet the assessee was deemed the owner for claiming depreciation as the building was owned and used for business purposes.

The court concluded that since the assessee exercised ownership rights over the property, the Tribunal was justified in granting depreciation under section 32 of the Income-tax Act.

Therefore, the court answered the question in favor of the assessee, affirming their entitlement to depreciation under section 32 of the Act.