COMMISSIONER OF INCOME TAX vs. REKHABEN V PATEL

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ITR/275/1987HC GujaratGJHC24012007198707 March 2001Author: HONOURABLE MR. JUSTICE J.M.PANCHAL,HONOURABLE MR. JUSTICE MOHIT S. SHAH3 pages
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What did the High Court hold?

The High Court held that the assessee was entitled to depreciation on the trucks. The Court relied on the Supreme Court's decision in Mysore Minerals Ltd. v. Commissioner of Income-tax (1999) 239 ITR 775. In that case, the Supreme Court held that an assessee in possession of a building on part payment, even without a registered deed of conveyance, was considered the owner for the purposes of Section 32 and entitled to depreciation. Applying this principle, the High Court concluded that although the assessee was not the registered owner of the trucks by the end of the accounting year, they were the 'owner' for the purposes of Section 32 of the Act due to possession and part payment. Therefore, the assessee was entitled to depreciation. The question was answered in the affirmative, in favour of the assessee and against the Revenue. No issue was expressly left undecided.

What were the facts?

The assessee purchased trucks on December 1, 1980, within the accounting period for Assessment Year (AY) 1981-82. However, the trucks were registered with the Regional Transport Office only in the period relevant to AY 1982-83. The assessee claimed depreciation for AY 1981-82, which was rejected by the Assessing Officer because the assessee was not the registered owner during that AY. The Commissioner of Income Tax (Appeals) allowed the depreciation claim, holding the assessee entitled to it despite the lack of registration by the end of the accounting period. The Income Tax Appellate Tribunal upheld this view, relying on a Calcutta High Court decision. The Revenue has referred this matter to the High Court.

What were the issues?

1. Whether, in law and on facts, the assessee was entitled to depreciation on the purchase of trucks when the trucks were not registered with the Regional Transport Office till the end of the relevant accounting period (AY 1981-82)? This question turns on the interpretation of Section 32 of the Income Tax Act, 1961, concerning the definition of 'owner' for claiming depreciation. Assessee's Contention: The assessee argued, and the lower authorities held, that ownership for the purpose of depreciation is established by possession and part payment, even without formal registration by the end of the accounting period. The assessee relied on the decision in CIT v. Salkia Transport Associates (1983) 143 ITR 39. Revenue's Contention: The Revenue contended that registration with the Regional Transport Office is a prerequisite for claiming depreciation, as the assessee was not the registered owner during the relevant accounting period. The Assessing Officer's view was based on this premise.

Which sections of the Income-tax Act were involved?

Section 32

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 275 of 1987

For Approval and Signature:

Hon'ble MR.JUSTICE J.M.PANCHAL and Hon'ble MR.JUSTICE M.S.SHAH

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus REKHABEN V PATEL -------------------------------------------------------------- Appearance: MR BB NAIK for MR RP BHATT for Petitioner NOTICE SERVED for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE J.M.PANCHAL and MR.JUSTICE M.S.SHAH

Date of decision: 07/03/2001

ORAL JUDGEMENT (Per : MR.JUSTICE J.M.PANCHAL)

At the instance of the Revenue, the Income-tax Appellate Tribunal, Ahmedabad, Bench 'C' has referred the following question of law for the opinion of this Court in respect of A.Y. 1981-82 :

"Whether, in law and on facts, the assessee was entitled to depreciation on the purchase of trucks when the trucks were not registered with the Regional Transport Office till the end of the relevant accounting period ?"

2.

FACTS : The assessee had purchased certain trucks on December 1, 1980, a date falling within the accounting period relevant to A.Y. 1981-82, but got them registered in the period relevant to A.Y. 1982-83. The assessee had claimed depreciation on the said vehicles at the assessment proceedings for A.Y. 1981-82, but the said claim was rejected by the Assessing Officer on the ground that the assessee was not the registered owner of the trucks during the assessment year under consideration.

3.

On appeal, C.I.T. (A) held that the assessee was entitled to depreciation on the vehicles despite the fat that they were not registered in assessee's name till the end of relevant accounting period. In appeal by the Revenue, the Tribunal has confirmed the view of C.I.T.(A) on the strength of the decision of Calcutta High Court in C.I.T. v. Salkia Transport Associates, (1983) 143 ITR 39, giving rise to the present Reference.

4.

We have heard the learned counsel for the Revenue. Though served, no one appears on behalf of the respondent. In MYSORE MINERALS LTD. v. COMMISSIONER OF INCOME-TAX, (1999) 239 I.T.R. 775, the assessee was a private limited company. During the assessment year 1981-82, the assessee had purchased for the use of its staff seven low income group houses from the Housing Board. The assessee had made part payments and was in turn made allotment of the houses followed by delivery of possession by the Housing Board. The actual deed of conveyance was not yet executed by the Housing Board in favour of the assessee. The assessee made a claim under section 32 of the Act in respect of depreciation of buildings used for the purpose of the business of the assessee. The claim was rejected by the Assessing Officer. This was upheld by the Tribunal and the High Court. On appeal, while reversing the judgment of the High Court, the Supreme Court has held that the assessee was in possession of building on part payment of price

and though the building was not registered in the name of the assessee, the assessee was owner of the building for the purposes of section 32 of the Act and was entitled to depreciation on it. In view of the principle laid down in the above quoted decision, we are of the opinion that though the assessee was not registered owner of the vehicles, he was owner of the vehicles for the purposes of section 32 and was entitled to depreciation on it. Therefore, we are of the opinion that the assessee was entitled to depreciation on the purchase of trucks when the trucks were not registered with the Regional Transport Office till the relevant accounting year. The question is accordingly answered in the affirmative i.e. in favour of the assessee and against the Revenue. The Reference accordingly stands disposed of with no order as to costs. (J.M.Panchal,J.) (M.S.Shah,J.)

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