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TMI Blog2014 (6) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee-society had rightly been allowed depreciation by the CIT(A) and the Tribunal as the assessee-society became the owner of the assets and was actually using the property in its own right as an owner on and from the date of order of the Governor and formation of the society – thus, there was no infirmity in the order of the Tribunal – Decided against Revenue. - D.B. Income Tax Appeal No.121/2012 - - - Dated:- 3-1-2014 - MR. AJAY RASTOGI AND MR. J.K. RANKA, JJ. Mr. RB Mathur, for the appellant BY THE COURT (Per Hon'ble Ranka, J.) J. K. Ranka J.- 1. This appeal under section 260A of the Income-tax Act, 1961 (for short, the IT Act ), has been preferred by the appellant-Revenue against the order of the Income-tax Appellate Tribunal, Jaipur Bench B , Jaipur (for short, the ITAT ) dated November 4, 2011, passed in I. T. A. No. 1191/JP-2010 by which the Income-tax Appellate Tribunal has dismissed the appeal filed by the appellant-Revenue against the order of the Commissioner of Income-tax (Appeals)-II, Jaipur (for short, the CIT(A) ). The relevant assessment year is 2007-08. 2. The brief facts, as emerging on the facts of record, are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation on and from the assessment year 2005-06. It was the further claim of the assessee-society that the claim admittedly was made and allowed from the assessment year 2005-06 and stood allowed in the assessment year 2005-06 and the assessment year 2006-07. It is only in the assessment year under appeal, i.e., for the assessment year 2007-08 that the claim has been disallowed by the Assessing Officer for the first time when the claim of depreciation became final from the assessment year 2005-06. It was further submitted that the word asset remaining the same, there was no question of disallowing depreciation in the third year as the facts and circumstances of the issue remain the same. 4. However, the Assessing Officer observed in the assessment order that there is no evidence in order to prove the change of ownership of the building from the Government of Rajasthan to the assessee-society and on records, the title still continues to be with the State of Rajasthan and, accordingly observed that since the assessee-society was not the owner, therefore, the depreciation cannot be allowed. 5. Dissatisfied with the disallowance of the depreciation, an appeal came to be preferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced here under: 32. (1) In respect of depreciation of (i) buildings, machinery, plant or furniture being tangible assets ; (ii) know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed 43. Definitions of certain terms relevant to income from profits and gains of business or profession.-In sections 28 to 41 and in this section, unless the context otherwise requires, (1) 'actual cost' means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority : Provided that where the actual cost of an asset, being a motor car which is acquired by the assessee after the 31st day of March, 1967, but before the 1st day of March, 1975, and is used otherwise than in a business of running it on hire for tourists, exceeds twenty-five thousand rupees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd later. In this backdrop, we have to consider as to whether merely because title or registration under the Indian Registration Act has not passed, would it be fatal to disallow depreciation. It is also not disputed by the Revenue that possession over the property is being enjoyed by the assessee-respondent and no claim of reclaiming the assets have been made by the State Government subsequent to transfer. In our view, merely because title is not transferred or registration under the Indian Registration Act is not obtained, depreciation cannot be disallowed. 12. The hon'ble apex court considered the same related issue in the case of Mysore Minerals Ltd. v. CIT [1999] 239 ITR 775 (SC) and considered the concept of the term own , ownership and owned and after referring to several authorities, observed as under (page 781) : 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 section 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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean that the asset is kept ready for use and if this condition is satisfied, even when it is not used for certain reason in the concerned assessment year, the assessee cannot be denied depreciation. In the instant case, not only the assessee is an active user but has all the assets recorded in its books of account. 14. The Punjab and Haryana High Court, in the case of CIT v. Metalman Auto P. Ltd. [2011] 336 ITR 434 (P H), has held that even if the air-conditioners, though purchased in the name of the managing director and his wife, were for the assessee and were to be used for the business of the assessee and not for the personal use of the managing director or his wife, depreciation was allowable. 15. If we look to section 32(1), as reproduced hereinabove, it simply observes about owning of the properties. Therefore, owned would not mean by way of a registration by way of title deed as held by the hon'ble apex court in the case of Mysore Minerals Ltd. (supra). If we look to section 43(1) Explanation 2, then, value of assets has to be recognised where transfer is by way of gift or inheritance and here in the case, assets have been transferred by the Government of Rajasth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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