9911796707
TMI Blog1987 (1) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... ended on March 31, 1966. Reference No. 25 of 1978 relates to the assessment years 1959-60 and 1960-61 for which the accounting periods ended on March 31, 1959, and March 31, 1960, respectively. The remaining material facts which are common are stated hereunder. The assessee, M/s Golcha Properties (P.) Ltd., went into voluntary liquidation on July 4, 1966. Pending the proceedings of winding up, its affairs were looked after by the official liquidator with effect from May 10, 1968. The Income-tax Officer applied to the company court under section 446 of the Companies Act, 1956, to proceed with the assessment of the company in respect of the assessment years 1965-66 and 1966-67. The company court has stayed the assessment proceedings resulting in extension of the time for completion of assessment. Admittedly, the assessment was completed in respect of both the assessment years within the extended period. The Revenue placed reliance on the provisions of Explanation to sub-section (1) of section 153 of the Act for contending that the assessment for these years has been completed within the prescribed period of limitation. The company had been carrying on the business of exhibiting ..... 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, the Tribunal was justified in holding that the assessee-company is not an industrial company ? 3. Whether, on the facts and in the circumstances of the case, and on a correct interpretation of the terms of the agreement dated October 31, 1955, and the consent decree dated February 25, 1959, the Tribunal is justified in holding that the assessee is not the owner of the cinema styled as Maratha Mandir and the machinery, plant, furniture, etc., installed in the said building by the assessee-company with its own finances and no depreciation and development rebate are available to it in respect thereto ? 4. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in rejecting the alternative contention of the assessee that the amount of Rs. 20,000 spent by the assessee-company on the construction of the cinema known as Maratha Mandir and in purchasing the various movable assets installed therein out of its own funds, is neither capital nor a revenue expenditure ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods " necessarily contemplates some kind of change in the goods itself which is obviously non-existing in the process of exhibiting the films. The Tribunal, therefore, was justified in rejecting the assessee's claim on this point as well. This question also has to be answered in favour of the Revenue. Question No. 3 relates to the assessee's claim for depreciation under section 32(1) of the Act which gives the benefit of depreciation in respect of buildings, machinery, plant or furniture " owned by the assessee and used for the purposes of business or profession ". The contention of the assessee is that the amount spent by it in completing the construction of the cinema hall known as Maratha Mandir and in installing the machinery, etc., therein is covered by this provision and, therefore, the assessee is entitled to claim depreciation thereon. The contention of the assessee is that the entire superstructure constructed by the assessee in accordance with the terms of the agreement dated October 30, 1955, and the consent decree dated February 25, 1959, and the plant and machinery installed therein for the purpose of carrying on the cinema business, were owned by the assessee and u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o exist throughout (sic). This is a further indication of the legislative intent and can be relied on as an aid to the construction of sub-section (1) of section 32 of the Act. Learned counsel for the assessee tried to contend that sub-section (1A) is merely declaratory in character. We are unable to accept this contention. Sub-section (1A) is a definite enacting provision and is obviously not intended to merely declare the existing law contained in sub-section (1). A mere declaration of the existing law contained in sub-section (1) covering also a lessee or licensee, etc., would have been easily made by inserting an Explanation to sub-section (1) saying so. It is, therefore, clear that not only the ordinary meaning of the word " owned " used in sub-section (1) and the context in which the same has been used indicate that sub-section (1) applies only to an absolute owner of the property, but the legislative history of these provisions also points in that direction. The Tribunal was, therefore, justified in rejecting the assessee's contention and refusing to give the benefit of section 32(1) of the Act. This question also has to be answered in favour of the Revenue. Question No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest which accrued to it as its income against the loans advanced by the assessee to M/s Golcha Properties (P) Ltd., Nepalganj, Nepal. The contention of the assessee is that this amount was given up by it on the request of the debtor after a debit note had been issued to the debtor at the instance of the debtor on account of financial exigencies which the debtor was facing. Resolution dated June 22, 1965, passed by the board of directors of the assessee company was relied on for this purpose along with correspondence exchanged between the assessee and the debtor. The Tribunal has held on the construction of resolution dated June 22, 1965, that the interest which had accrued to the assessee was really not given up by this resolution and it only had the effect of deferring recovery of that amount. Learned counsel for the assessee challenges this conclusion and places reliance on a decision of the Bombay High Court in H. M. Kashiparekh Co. Ltd. v. CIT [1960] 39 ITR 706. In our opinion, the view taken by the Tribunal is not open to interference. In the first place, the entire material on which the assessee relied for this purpose comprising of the correspondence between it and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be that person who can exercise the rights of the owner not on behalf of the owner but in his own right. In the instant case, it is not in dispute that ownership has been transferred to the assessee by Maratha Mandir Private Ltd. and in this view of the matter, in our opinion, this decision instead of supporting the case of the assessee, lends support to the contention of the Revenue. Reliance was then placed on the observations made in a decision of the Calcutta High Court in CIT v. Steelcrete (P.) Ltd. [1983] 142 ITR 45, wherein it has been held that the expression " owner " has different meanings in different contexts and the owner need not always have the complete user of right of full ownership at all times. In that case, the assessee, a private limited company engaged in construction work, it secured a contract and for doing the job, imported some type of machinery which was actually imported by the Government of India and payment was also made by the Government of India. The assessee was allowed to use the machinery on the condition that the Government of India recovered the total cost of machinery from the assessee as the owner of the building during the period of the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the period of the lease, he was the owner of the entire third floor. In those circumstances, the court held that full ownership for a period does not militate against the concept of ownership in jurisprudence. However, in the same judgment, the court had added that it is not unknown that a lessee 0f a land may construct building at his own expense but at the same time the ownership in it, according to the indenture of lease, may vest in the lessor. Since the time of construction, the lessee merely may pay rent for it adjusting it towards the amount spent on the construction. In such a case, the lessee will not be the owner of the building even for a limited period and these observations in fact apply to the present case and as such, the observations in this case support the case of the Revenue rather than the assessee. Reliance was then placed on CIT v. Chandra Agro P. Ltd. [1979] 117 ITR 251 (All). This was a case regarding certain expenditure made on improvement of a building and in fact no law has been discussed in this case. Thus, it neither applies on facts nor on law to the instant cage. Learned counsel thereafter cited Saiffuddin v. CIT [1985] 156 ITR 127 (Raj). T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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