Court allows depreciation claim on building sans conveyance instrument; broad interpretation of ownership favors assessee

The High Court held that the assessee was entitled to claim depreciation on a building despite the absence of a registered instrument of conveyance. Relying on Supreme Court precedents emphasizing interpreting provisions to benefit the assessee, the Court interpreted ownership broadly to fulfill legislative intent. The decision allowed the assessee's appeal, overturning the Income Tax Officer's disallowance of the depreciation claim. No costs were awarded as the assessee did not appear in the case.

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Issues involved:
1. Claim of depreciation without a registered instrument of conveyance.

Analysis:
The case involved a dispute regarding the entitlement of the assessee to claim depreciation on a building despite the absence of a registered instrument of conveyance. The assessee had taken over assets and liabilities of a company without executing a registered conveyance instrument. The Income Tax Officer disallowed the depreciation claim, stating that it could not be accepted without a registered instrument. The CIT(A) allowed the appeal based on a Tribunal order from a previous case of the assessee. The Revenue challenged this decision, leading to a reference to the High Court.

The main issue for consideration was whether the assessee could claim depreciation without a registered instrument of conveyance. Section 32 of the Income Tax Act, 1961, allows for deduction of depreciation on buildings owned and used for business purposes. The Division Bench referred to previous judgments, including one from the Allahabad High Court and another from the Supreme Court, to analyze the interpretation of relevant provisions. The matter was then referred to a Full Bench for authoritative consideration.

The High Court heard arguments from the Revenue's counsel and considered a subsequent Supreme Court judgment in Mysore Minerals Ltd. vs. CIT, which emphasized interpreting the provision to benefit the assessee. The Supreme Court rulings clarified that ownership terms should be interpreted broadly to fulfill legislative intent. Citing these authoritative pronouncements, the High Court concluded that the assessee was entitled to claim depreciation on the building, even without a registered conveyance instrument. As no appearance was made on behalf of the assessee, no costs were awarded in the case.

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