Government grant transfer without registration permitted depreciation on buildings where ownership was recognised for tax purposes.

A registered conveyance deed was not required for transfer of Government-owned buildings where the transfer proceeded by Government grant, and ownership was treated as effective without registration. On that basis, the assessee was regarded as owner for depreciation purposes, and depreciation on the buildings was allowable.

---

---

Issues: Whether a registered conveyance deed was necessary for transfer of Government-owned buildings to the assessee, and whether depreciation on such buildings was admissible to the assessee as owner.

Analysis: The reference arose from assessment years 1974-75 and 1977-78 under section 256(1) of the Income-tax Act, 1961. The buildings had been taken over by a Government-owned company from small industrial undertakings formerly run by the State Government. The Revenue denied depreciation on the footing that there was no valid transfer without registration and, therefore, no legal ownership in the assessee. The Court applied the earlier view that in the case of a Government grant, registration is not necessary, and treated the transfer as effective for ownership purposes.

Conclusion: A registered conveyance deed was not required, and depreciation on the buildings was allowable to the assessee as owner.

---