Broad acquisition for capital gains, but strict ownership required for depreciation under tax law.

For section 50, acquisition was treated broadly: execution of sale agreements, payment of consideration and taking possession were sufficient to amount to acquisition of the premises even though title was not formally perfected, so the cost and related expenses were deductible in computing short-term capital gains. For section 32, depreciation was denied because ownership in the stricter legal sense had not yet passed, as share transfers and formal completion of title were still pending and transfer was not complete for the relevant year. The assessee therefore succeeded on the capital gains computation issue but failed on the depreciation claim.

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Issues: (i) Whether the assessee had "acquired" the two premises within the meaning of section 50 of the Income-tax Act, 1961, so as to be entitled to deduct their cost from the sale proceeds of the transferred depreciable asset for computation of short-term capital gains; (ii) Whether the assessee was entitled to depreciation under section 32 of the Income-tax Act, 1961 on those premises.

Issue (i): Whether the assessee had "acquired" the two premises within the meaning of section 50 of the Income-tax Act, 1961, so as to be entitled to deduct their cost from the sale proceeds of the transferred depreciable asset for computation of short-term capital gains.

Analysis: The agreements of sale were executed, consideration was paid, and possession had been taken, though the No Objection Certificate under Chapter XXC was issued later. The expression "acquired" in section 50 was treated as wider than legal conveyance and capable of covering acquisition of domain over the property even without perfected title. Support was drawn from the statutory scheme under Chapter XXC, where acquisition and vesting are not synonymous, and from the principle that the relevant test is acquisition of effective control rather than formal registration of title.

Conclusion: The assessee had acquired the premises within the meaning of section 50 and was entitled to deduct their cost and related expenses in computing short-term capital gains.

Issue (ii): Whether the assessee was entitled to depreciation under section 32 of the Income-tax Act, 1961 on those premises.

Analysis: Depreciation under section 32 requires ownership of the asset. Although the agreements were executed and possession was obtained, the transfer of share certificates and the formal completion of title had not taken place within the relevant accounting year, and Chapter XXC also barred transfer until clearance was granted. On that basis, the premises could be treated as acquired for section 50 purposes without being treated as owned for section 32 purposes.

Conclusion: The assessee was not entitled to depreciation under section 32.

Final Conclusion: The computation issue under section 50 was decided in favour of the assessee, while the depreciation claim was rejected, resulting in a partial success for the assessee.

Ratio Decidendi: For section 50, acquisition is not confined to completed legal title and may be satisfied by effective acquisition of dominion over the property, whereas section 32 requires ownership in the stricter legal sense.

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