Tax ownership for depreciation depends on substantive rights, so later registration did not defeat the assessee's claim.

For income-tax purposes, ownership is determined by the substantive right to enjoy the property and receive its income, not by legal title alone under the Transfer of Property Act or Registration Act. Where the assessee had taken possession, paid full consideration and was otherwise entitled to the benefits of ownership, registration of the conveyance deed was not indispensable to claim depreciation. Depreciation could therefore not be denied merely because the sale deed was registered later, and the reference was answered in favour of the assessee and against the Revenue.

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Issues: Whether the assessee was entitled to depreciation on a building purchased by it though the conveyance deed had not been registered when possession had been taken and full consideration had been paid.

Analysis: The issue was governed by the Supreme Court ruling that, for income-tax purposes, ownership is to be understood in the context of the right to receive income and not confined to legal title under the Transfer of Property Act or Registration Act. Registration of the sale deed is not indispensable where the assessee has acquired possession, paid the consideration, and is otherwise entitled to the benefits of ownership for tax purposes. The earlier view that only a legal owner could claim the benefit was treated as no longer good law.

Conclusion: The assessee was entitled to depreciation on the building notwithstanding the subsequent registration of the property, and the answer to the reference was in the affirmative and against the Revenue.

Final Conclusion: Depreciation could not be denied merely because the sale deed was registered later, since tax ownership depends on the substantive right to enjoy the property and receive its income.

Ratio Decidendi: For income-tax purposes, ownership is determined by the substantive right to receive income and enjoy the property, and not solely by registration of the conveyance deed.

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