COMMISSIONER OF INCOME TAX Vs. PARTHAS TRUST

JUDGEMENT

(1.) THE question of law referred in this case is whether, on the facts and in the circumstances of the case, the Tribunal was right in law and fact in holding that the assessee is entitled to depreciation. THE facts are as follows : THE assessee is a private trust. While completing the assessment, the Assessing Officer disallowed the assessee's claim for depreciation on certain buildings. According to the Assessing Officer, the buildings had not been registered in the name of the assessee-trust. On appeal, the first appellate authority held that the assessee was entitled to depreciation on the buildings as they were constructed by the trust (though the land in which they stood were not registered in their name). THE Tribunal held that even if the land does not belong to him, the assessee would be entitled to depreciation. THE Tribunal also held that there is nothing in Section 32 which bars such a claim being made.

(2.) LEARNED counsel for the Department, Sri P. K. Ravindranatha Menon, brought to our notice the following decision in Kalpaha Tourist Home (P.) Ltd. v. CIT [1988] 172 ITR 364 (Ker), wherein it was held that the depreciation cannot be claimed by someone without any real connection with the asset and the claimant must be one with much more than some threads of rights. Depreciation is claimable only by the owner who uses the assets in question. In that case this court held that the Tribunal was justified in disallowing the claim for depreciation of the assessee in respect of its building on the ground that the assessee was not the owner of the building. Another decision cited was in Parthas Trust v. CIT [1988] 169 ITR 334 (Ker) [FB]. LEARNED counsel for the assesses brought to our notice a decision of the Supreme Court in CIT v. Podar Cement Pvt. Ltd. [1997] 226 ITR 625 and another decision of the Supreme Court in Mysore Minerals Ltd. v. CIT [1999] 239 ITR 775. In CIT v. Podar Cement Pvt. Ltd. (1997] 226 ITR 625, the Supreme Court has held as follows (headnote) :

(3.) IN view of the above facts and in the light of the Supreme Court decisions, we answer the question in the affirmative and in favour of the asses-see.