Tribunal affirms assessee's depreciation claim on factory building, emphasizing ownership concept.

The Tribunal dismissed the Department's appeal, affirming the CIT(A)'s decision to allow the assessee's claim of depreciation on the factory building. The Tribunal emphasized the broader concept of ownership for depreciation purposes, citing relevant legal precedents. The assessee's possession and control over the property for business use were deemed sufficient to establish ownership, in line with Supreme Court decisions. The Department's argument regarding the necessity of formal ownership proof for claiming extra depreciation was rejected, leading to the dismissal of the appeal.

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Issues:
Department's appeal for the assessment year 2006-07 regarding the deletion of addition made on account of disallowance of extra depreciation on factory building.

Analysis:
The Department contended that the Commissioner of Income Tax(Appeals) erred in deleting the addition of Rs. 34,63,965/-, made on account of disallowance of extra depreciation on the factory building. The AO observed that the immovable properties, including the factory building, were pending formal registration of title deed/ownership rights in the name of the company. The claim of depreciation was disallowed as the assessee did not provide any reply regarding ownership. The CIT(A) deleted the disallowance, leading to the Department's appeal.

The Department argued that ownership proof is a pre-requisite for claiming extra depreciation on the factory building. The AO based the disallowance on the Notes to Accounts, stating the registration of the factory building was pending. However, it was undisputed that the building was used exclusively for the business of manufacturing construction material. The issue was whether the CIT(A) erred in deleting the disallowance.

The Supreme Court's decision in Mysore Minerals Ltd. v. CIT was referred to, emphasizing the wider interpretation of ownership for depreciation claims. It was highlighted that possession and dominion over the property, even without a formal deed of title, can establish ownership for depreciation purposes. The case of the assessee fell within the principles laid down by the Supreme Court. Additionally, the National Industrial Corpn. Ltd. v. CIT case was cited to support the element of ownership based on exercising necessary control over the property.

The Tribunal upheld the CIT(A)'s decision, stating that the assessee's claim of depreciation was valid as the assessee had possession and control over the factory building for business purposes. The Department's appeal was dismissed as the grievance lacked merit based on the established legal principles regarding ownership and depreciation claims.

In conclusion, the Tribunal dismissed the Department's appeal, affirming the CIT(A)'s decision to allow the assessee's claim of depreciation on the factory building, emphasizing the broader concept of ownership for depreciation purposes as established by relevant legal precedents.

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