1994 (4) TMI 64 - HC - Income Tax

High Court Upholds Property Owner's Exclusive Right to Depreciation Benefits

BVK. Seshavatara Versus Commissioner Of Income-Tax

The Tribunal's decision denying fractional owners' claim for depreciation allowance was upheld by the High Court, following the Supreme Court's ruling ... Question Of Law, Rectification Of Mistakes, Supreme Court Issues Involved: The judgment addresses the entitlement of fractional owners to claim depreciation allowance under the Income-tax Act, 1961, and the validity of rectification orders based on subsequent legal decisions.Entitlement to Depreciation Allowance: The assessees, co-owners of a rice mill, claimed depreciation allowance for their shares, initially allowed by the Assessing Officer but later withdrawn under section 154 based on a Supreme Court decision. The Deputy Commissioner allowed the appeals, but the Tribunal reversed, holding that fractional owners cannot claim depreciation. The assessees sought to refer questions of law to the High Court, which the Tribunal declined, citing binding precedents. The Supreme Court precedent in Seth Banarsi Dass Gupta's case clarified that depreciation benefit is only for the owner of the property, not fractional owners.Validity of Rectification Orders: The judgment discusses whether rectification orders based on subsequent legal decisions are valid under section 154 of the Income-tax Act. The legal position, as per the Supreme Court in S. A. L. Narayana Row v. Model Mills Nagpur Ltd., establishes that a subsequent decision can be the basis for rectifying an earlier order. The Tribunal's decision to reject the plea to refer questions of law to the High Court was upheld based on this legal precedent.In conclusion, the High Court rejected the three income-tax cases based on the established legal principles regarding entitlement to depreciation allowance for fractional owners and the validity of rectification orders based on subsequent legal decisions.