Case Law Details
We find that the claim of the assessee that the building in question was purchased by it and was in use for the purpose of its business was not denied by the AO. The AO has disallowed the claimed depreciation only on the basis that the building was yet to be registered in the name of the assessee company.
The assessee claimed that the building was purchased through deed of assignment and agreement for sale in the year 2005 and possession thereof was handed over to the assessee on the payment of agreed sale consideration to the seller. The properties were however, could not register in the name of the assessee company during the period of acquisition and the year of use. The ld. CIT (A) has allowed the claimed depreciation respectfully following the decision of Hon’ble Supreme Court in the case of Mysore Minerals Ltd. Vs. CIT 239 ITR 775 (SC) and of Hon’ble Delhi High Court in the case of Gowersons Publishers P. Ltd Vs. CIT 240 ITR 191 (Del) (FB). The Hon’ble Supreme Court in the case of Mysore Minerals Ltd. Vs. CIT (Supra) has been pleased to hold that anyone in possession of property in his own title exercising such dominion over the property as would enable others being excluded there from and having the right to use and occupy the property and or to enjoy its usufruct in his own right, would be the owner of the building though a formal deed of title may not have been executed and registered as contemplated by the transfer of property Act the registration Act etc. The Hon’ble Court held further that “building owned by the assessee” the expression as occurring in Section 32 (1) of the IT Act, means the person who having acquired possession over the building in his own right uses the same for the purpose of the business or profession though a legal title has not been conveyed to him consistently with the requirements of laws such as the transfer of property Act and the registration Act, etc. generally speaking depreciation is allowable for the diminution in the value due to wear and tear of a capital asset employed by an assessee in his business. Similar view has been expressed by the full Bench of the Hon’ble Delhi High Court in the case of Gowersons Publishers P. Ltd. Vs. CIT (Supra), wherein it has been held by the Hon’ble Delhi High Court that the context in which the words “owner or owned by which” used, relates, deriving benefit by way of income or by personal use of property. The real test is the right to enjoy the property as owner. The ratio laid down in these decisions is fully applicable on the issue raised before us in the ground. Respectfully following the same the ld. CIT (A) in our view, has rightly held that the assessee was entitled to the claimed depreciation of Rs.17,81,329/- with direction to the AO to allow the same. The same is upheld.
INCOME TAX APPELLATE TRIBUNAL, DELHI
I.T.A. NO. 2121/Del/2011 – Assessment Year: 2007-08
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Is not the A O /Dept obliged to follow a point of law established by the Supreme Court? In the instant case, at least the appeal on the issue referred to in Ground No.3 could have been avoided.
It will be in interests of fair tax administration if a system of Compliance Report /Action Taken Report in respect of S C Judgements is evolved. This will help save the time lost in appeals on decided principles.
Regards.
R Balasubramanian, Chennai-59.