Depreciation on beneficial ownership: possession and dominion over business buildings can satisfy section 32 without registered conveyance.

For depreciation under section 32 of the Income-tax Act, 1961, "owned" is not confined to absolute legal title under the Transfer of Property Act; it extends to a person who has acquired possession in its own right, exercises dominion over the property to the exclusion of others, and uses it for business. A formal deed of conveyance and registration are relevant to title but are not indispensable where the assessee has substantially acquired the incidents of ownership for business purposes. On that basis, the assessee is entitled to depreciation on buildings despite the absence of a registered conveyance deed.

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Issues: Whether depreciation under section 32 of the Income-tax Act, 1961 is available to an assessee who has been put in possession of buildings and has part-paid the consideration, but in whose favour a formal deed of conveyance has not yet been executed and registered.

Analysis: Section 32 confers depreciation on buildings owned by the assessee and used for the purposes of the business or profession. The expression "owned" was held to be capable of a wider, contextual meaning rather than being confined to absolute legal ownership under the Transfer of Property Act. The decisive consideration is whether the assessee has acquired possession in its own right, exercises dominion over the property to the exclusion of others, and uses it for business purposes, so that the asset is effectively held and enjoyed by the assessee. A formal conveyance, though relevant for legal title, is not indispensable where the assessee has substantially acquired the incidents of ownership for the purposes of section 32.

Conclusion: The assessee is entitled to depreciation under section 32 despite the absence of a registered conveyance deed, because it was in possession and control of the buildings in its own right and used them for its business.

Ratio Decidendi: For the purpose of section 32 of the Income-tax Act, 1961, "owned" includes a person who has acquired possession and dominion over the property in his own right and uses it for business, even if legal title has not yet been formally conveyed and registered.

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