Beneficial ownership for depreciation allows section 32 relief when possession and control are with the assessee despite unregistered title.

Depreciation under section 32 is allowable where the assessee has paid full consideration, taken possession, and exercises dominion and control over the property in its own right. Legal title need not be fully registered if the assessee is in exclusive enjoyment as owner and the asset is used for business. A transferee in possession under an executed bargain may be treated as the owner for depreciation purposes. On these facts, depreciation was held allowable and the issue was answered in favour of the assessee.

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Issues: Whether depreciation under section 32 of the Income-tax Act, 1961 is allowable where the assessee has paid full consideration, obtained possession and exercised ownership rights, but the conveyance deed has not yet been registered in its name.

Analysis: Depreciation under section 32 requires the asset to be owned by the assessee and used for business. The use requirement was undisputed. On ownership, the relevant test was whether the assessee had dominion and control over the property in its own right. Where full consideration has been paid, possession has been delivered, and the assessee is in exclusive enjoyment as owner, the absence of a registered title deed does not defeat the claim. The reasoning was supported by the principle that a transferee in possession under an executed bargain may be treated as owner for the purpose of depreciation, even though legal title is still incomplete.

Conclusion: The assessee was entitled to depreciation under section 32, and the question was answered in the affirmative in favour of the assessee and against the Revenue.

Ratio Decidendi: For depreciation under section 32 of the Income-tax Act, beneficial ownership is sufficient where the assessee has paid the full consideration and enjoys the property with dominion and control in its own right, even if the legal title has not yet been conveyed.

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