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TMI Blog2014 (3) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the assessee – thus, there is no reason to interfere with the findings of the Tribunal allowing the claim of the assessee – Decided against Revenue. Entitlement for depreciation u/s 32(1) of the Act - Whether the Tribunal was justified in holding that the land and factory building, agreed to be purchased from M/s. Wipro Ltd., which had a right under a lease cum sale agreement, would be entitled to depreciation u/s 32(1) of the Act – Held that:- The assessee got into possession of the unit/industrial undertaking from Wipro by virtue of the Agreement to sale and since then, is in possession thereof in its own right exercising such dominion over the same and have right to use, occupy and to enjoy its usufruct in its own right – the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and in the circumstances of the case and in law, the Tribunal was justified in holding that under Section 80IB, deduction is allowable? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the land and factory building, agreed to be purchased from M/s. Wipro Ltd., which had a right under a lease cum sale agreement, would be entitled to depreciation under Section 32(1) of the Act? 3. The factual matrix that is necessary for deciding this appeal is that, the assessee purchased the building, plant and machinery from one M/s. Wipro Ltd., by an agreement to sale dated 30.08.2000. When the assessee purchased the building, plant and machinery, it was a running unit/indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was issued in the context of old provision namely, section 84 of the Act, the CIT(A) did not give benefit to the assessee. The Tribunal, however, granted that benefit to the assessee and consequently, allowed the deduction for the assessment year 2001-02. It is in this backdrop, we have perused the relevant part of Section 80IB, which reads thus:- Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings. 80IB. (1) Where the gross total income of an assessee includes any profits and gains derived from any business referred to in subsection (3) to [(11), (11A) abd (11B)] (such business being hereinafter referred to as the eligible business), there shall, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian company which is entitled to the deduction under this section is transferred, before the expiry of the period specified in this section, to another Indian company in a scheme of amalgamation or demerger- 4. The expressions employed in sub-section (1) of Section 80IB any business , such business and eligible business read with expression in the case of an industrial undertaking as occur in sub-section (3) of Section 80IB, in our opinion, it is a clear indication that the deduction contemplated under this provision is relatable to the unit/business/industrial undertaking. Therefore, whosoever is running the unit/industrial undertaking having domain over it, is entitled for deduction as contemplated by Section 80IB of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee on 30.12.2003 and then the sale deed on 26.05.2009. The execution of the lease agreement dated 30.12.2003 by the KIADB or the sale deed dated 26.05.2004 in favour of the assessee is an indication that the transfer by Wipro in favour of the assessee was not in contravention of the terms and conditions of the original lease agreement between the KIADB and Wipro. Since the date of transfer, the assessee is having domain over the unit/industrial undertaking. The Assessing officer, however, disallowed the depreciation on the ground that the ownership rights over the land were not transferred in favour of the assessee. In other words, it was held that since the ownership rights over the land for the relevant assessment year was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll view of the abovesaid authorities show that the very concept of depreciation suggests that the tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset is utilizing the capital asset and thereby losing gradually investment caused by wear and tear, and would need to replace the same by having lost its value fully over a period of time. It is well-settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the legislature in enacting S.32 of the Act would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use ..... X X X X Extracts X X X X X X X X Extracts X X X X
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