Depreciation on flat purchases: notional land-value bifurcation cannot reduce allowance where deed transfers only superstructure.

Depreciation on flats purchased on ownership basis under section 32 could not be reduced by a notional split of the composite price into land and building where the conveyance deed transferred only the superstructure and did not evidence any separate land consideration. The deed showed that land was to remain with the vendor and later pass to a co-operative society or similar body, while the assessee acquired rights in the flats and common areas only. In the absence of material showing a distinct land component, and consistent with prior acceptance of the claim, the tax authorities' presumed apportionment was unjustified and depreciation on the full cost was allowed.

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Issues: Whether depreciation on flats purchased on ownership basis could be restricted by bifurcating the composite purchase price into land and building, and whether the assessee was entitled to depreciation on the full price paid for the flats.

Analysis: Depreciation under section 32 is allowable on a building owned and used for business. The conveyance deed showed that only the superstructure was transferred to the assessee on ownership basis, while the land was to remain with the vendor and be conveyed to a co-operative society or similar body. The tax authorities' attempt to split the purchase price was based on presumptions and not on material from the deed. The deed and the relevant apartment ownership provisions showed only an interest in common areas and facilities, not ownership of land. In the absence of evidence that any separate amount was paid for land, and in view of the earlier acceptance of depreciation in prior assessment years, the disallowance based on a presumed land component was unjustified.

Conclusion: The assessee was entitled to depreciation on the full cost paid for the flats, and the disallowance by bifurcating land value was deleted.

Ratio Decidendi: Where a conveyance deed transfers only the superstructure of a flat and does not evidence any separate consideration for land, depreciation cannot be curtailed by a notional apportionment of the composite purchase price between land and building.

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