Government transfer without registration can still confer ownership for depreciation under section 32 where the Government Grants Act applies.

Depreciation under section 32 of the Income-tax Act was available because the assessee satisfied the ownership requirement in respect of the three raw material depots transferred by the Government. Section 2 of the Government Grants Act, 1895, was applied to hold that government grants or transfers of land or interests therein are excluded from the Transfer of Property Act, 1882, and the expression "other transfer" is wide enough to include transfers for consideration. As a result, a registered conveyance deed was not necessary to pass title, and the assessee was treated as owner of the depots for depreciation purposes. The claim for depreciation was therefore allowed.

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Issues: Whether the assessee was entitled to depreciation on the three raw material depots transferred by the Government without a registered conveyance deed, and whether the assessee could be treated as the owner of those assets for the purposes of section 32 of the Income-tax Act, 1961.

Analysis: Depreciation under section 32 is available only if the asset is of the relevant class, used for business, owned by the assessee, supported by the prescribed particulars, and within the cost limit. The transfer in question was made by the Government for consideration, and section 2 of the Government Grants Act, 1895, excludes the operation of the Transfer of Property Act, 1882, for a grant or other transfer of land or any interest therein made by the Government. The expression "other transfer" was held wide enough to cover transfers for consideration, so a registered conveyance was not necessary to pass ownership in favour of the assessee.

Conclusion: The assessee was the owner of the depots for the purpose of depreciation and was entitled to the allowance claimed; the question was answered in the affirmative and against the Revenue.

Ratio Decidendi: Section 2 of the Government Grants Act, 1895, overrides the requirement of registration under the Transfer of Property Act, 1882, for government transfers of land or interests therein, including transfers for consideration, and ownership so transferred is sufficient to support a claim for depreciation under section 32 of the Income-tax Act, 1961.

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