Ownership for depreciation requires registered title; possession and payment alone do not establish ownership of immovable property.

Depreciation under section 32 requires that the asset be used for business and that the assessee be the owner. For immovable property, title passes only through a registered instrument, and section 47 of the Registration Act does not create ownership from the date of payment or possession; it only relates the operation of a registered document back to the time it would have operated if registration had not been required. Mere possession, consideration, or part performance was held insufficient to establish ownership for depreciation purposes. On that basis, the building was not treated as owned during the relevant accounting period, and depreciation was denied.

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Issues: Whether depreciation under section 32 of the Income-tax Act, 1961, can be claimed on a building used in the business when the sale deed was executed and registered after the relevant previous year, and whether section 47 of the Registration Act, 1908, relates the transfer of title back to the date of payment of consideration and delivery of possession.

Analysis: Depreciation is allowable only if the asset is a building, is used for the business, prescribed particulars are furnished, and, importantly, the assessee is the owner of the asset. In the case of immovable property of value exceeding Rs. 100, title passes only through a registered instrument under section 54 of the Transfer of Property Act, 1882, and the sale deed is compulsorily registrable under section 17(1)(b) of the Registration Act, 1908. Section 47 of the Registration Act, 1908, only provides that a registered document operates from the time it would have operated if registration had not been required; it does not create title earlier than execution and registration, nor does it make a sale complete merely because possession and consideration preceded registration. The authorities relied on by the assessee were distinguished or disapproved, and the contrary view that mere possession or part performance does not amount to ownership for section 32 was accepted.

Conclusion: The assessee was not the owner of the building during the relevant accounting period and was not entitled to depreciation. The question was answered in the negative and against the assessee.

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