Beneficial ownership for depreciation: business possession can satisfy section 32 even without registered title transfer.

For depreciation under section 32 of the Income-tax Act, the term "owned by the assessee" was construed to include beneficial ownership, dominion and business use of the asset, and not only complete legal title transferred by registered conveyance. A person in possession enjoying the building for the relevant business purpose may therefore qualify as owner for depreciation purposes even where formal legal ownership has not passed. On that basis, depreciation on the buildings was held allowable and the reference was answered in favour of the assessee and against the Revenue.

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Issues: Whether depreciation under section 32 of the Income-tax Act, 1961 could be claimed by an assessee in respect of a building where legal title had not been transferred by registered conveyance.

Analysis: The expression "owned by the assessee" in section 32 was construed in the context of the Act and not as requiring complete legal title or the power to execute a conveyance. The Court followed the settled view that for depreciation it is sufficient if the assessee has dominion and uses the property for the business, even if formal legal ownership has not passed. Reliance was placed on the consistent line of authority that the word "owner" in this context is not confined to a person with full title capable of transfer, and includes a person in possession enjoying the property for the relevant statutory purpose.

Conclusion: The assessee was entitled to depreciation allowance on the buildings, and the reference was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: For the purpose of section 32 of the Income-tax Act, 1961, "owner" includes a person who has beneficial possession and user of the asset for the business, even if legal title has not been conveyed by registered deed.

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