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TMI Blog1990 (6) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst Rs. 25.5 lakhs down payment and balance of deferred payment for 15 months @ 12 per cent interest per annum at quarterly rest. The deed of sale for the deal was to be executed on receipt of Rs. 10 lakhs and of the balance of Rs. 30 lakhs. On 6-2-1981 4 separate documents were executed namely (1) Agreement between M/s. Jal Doot Shipping Pvt. Ltd., and the partners of the assessee for sale of the ship in question ; (2) Charter party between M/s. Jal Doot Shipping Pvt. Ltd., the owners of the ship and the assessee (described therein as Charterers) whereby the owner agreed to let and the Charterer agreed to hire the vessel for 15 months on the terms stated therein ; (3) Time-charterparty between the assessee (described as despondent owners) and M/s. Jal Doot Shipping Pvt. Ltd., Bombay (described as Charterers) providing that the owners had let and the charterers had hired the vessel for the period of 15 months on the terms stated therein ; (4) Management Agreement between the assessee (described as owners) and Jal Doot Shipping Management Services (Proprietor M/s. Jal Doot Shipping Pvt. Ltd.) as managers to the effect that the owners had acquired the vessel on bareboat charter-cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT (Appeals) it was submitted on behalf of the assessee that the ship had in fact sunk in the next year. It was also stated that the assessee had not claimed insurance for the sinking of the ship from the Insurance Company. The learned CIT (Appeals) agreeing with the ITO confirmed the disallowance of depreciation, holding that the assessee was not the owner of the ship. 17. Before us, on behalf of the assessee, the learned counsel for the assessee reiterated the submissions made on behalf of the assessee before the Income-tax authorities. Firstly, he stated that the assessee was the owner of the ship. Secondly, he submitted that for claiming depreciation under section 32 the assessee was not required to be the full or legal owner. For this purpose, reliance was placed by him on the following decisions : (1) Charandas Haridas v. CIT [1960] 39 ITR 202 (SC) at page 208. (2) CIT v. T.M. Aravinda Reddy [1979] 120 ITR 46 (SIC). He also referred to the Board's Circular No. 9 of 1943 regarding hire purchase and relied upon the decision of Delhi High Court in the case of Addl. CIT v. General Industries Corpn. [1985] 155 ITR 430/23 Taxman 447 for the proposition that machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed, the assessee could not claim to be the owner of the house property. Reference was also made by him to the decision of Kerala High Court in the case of Parthas Trust v. CIT [1987] 35 Taxman 191/[1988] 169 ITR 334 (FB) for the proposition that ownership referred to legal title in an asset for the purposes of claiming depreciation. He submitted that it was a mere device on the part of the assessee to avoid payment of the tax due. He, therefore, supported the orders of the Income-tax authorities. 18. The rival submissions as also the decisions referred to above have been heard and duly considered. The claim of depreciation lies under section 32 of the Income-tax Act, 1961 which uses the expression owned by the assessee ". Unlike section 27 which gives a wider definition of " owner of house property " for the purposes of sections 22 to 26, no definition is given in the Act for the purposes of section 32. Section 2(47) defines " transfer in relation to a capital asset " and section 47 enumerates transactions which are not regarded as transfers. In the case of T.M. Aravinda Reddy the Supreme Court was examining the expression " purchase " used in section 54(1) and held that gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i High Court in the case of General Industries Corpn. We have therefore to see as to what is the nature of the asset, the depreciation claimed in respect of which is in question and as to what is the law which governs the transfer of ownership in respect thereof. We have then to examine whether the assessee could be said to be owning the asset in question. 19. In the present case, the asset in question is a ship. Section 3(23) of the Merchant Shipping Act, 1958 provides that " Owner " means-- (a) in relation to a ship, the person to whom the ship or a share in the ship belongs, (b) in relation to a sailing vessel, the person to whom the sailing vessel belongs. Section 42(1) of that Act mandates that no person shall transfer or acquire any Indian ship or any share or interest therein without the previous approval of the Central Government and any transaction effected in contravention of this provision shall be void and unenforceable. The assessee as well as M/s. Jai Doot Shipping Pvt. Ltd. did apply to the Director General Shipping for such approval on16-6-1981but it is neither the case of the assessee nor there is any evidence to show that such an approval was given by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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