Broad ownership for depreciation and contingent liability treatment for insurance fund contributions shaped the tax outcome.

For depreciation under section 32, ownership was read broadly to include possession and the right to enjoy property handed over by the Government under a grant, so absence of a registered conveyance did not defeat the claim. The depreciation claim on the buildings was therefore upheld. By contrast, contributions to a statutory insurance fund meant to meet third-party claims were treated as provision for a contingent liability, so the deduction was disallowed. The result was partial relief: depreciation was allowed, but the insurance fund contribution was not deductible.

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Issues: (i) Whether depreciation on buildings was allowable where the property had been handed over by the Government without a registered conveyance in the assessee's name. (ii) Whether the contribution made to the insurance fund was deductible in computing the assessee's income.

Issue (i): Whether depreciation on buildings was allowable where the property had been handed over by the Government without a registered conveyance in the assessee's name.

Analysis: Wide meaning is to be given to the term "owner" for the purpose of depreciation. Where the assessee is in possession and the property has been handed over by the Government under a grant, absence of a registered instrument does not defeat the claim for depreciation.

Conclusion: The issue is answered in favour of the assessee and against the Revenue.

Issue (ii): Whether the contribution made to the insurance fund was deductible in computing the assessee's income.

Analysis: Contributions to the statutory insurance fund for meeting third-party claims constitute provision for a contingent liability and are not allowable as deduction.

Conclusion: The issue is answered in favour of the Revenue and against the assessee.

Final Conclusion: The claim for depreciation was upheld, but the deduction for contribution to the insurance fund was disallowed, resulting in partial relief to the assessee.

Ratio Decidendi: For depreciation under section 32, ownership includes possession with the right to enjoy the property even without a registered conveyance, but contributions made to meet a contingent liability are not deductible.

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