Beneficial ownership and diagnostic outputs treated as production justified depreciation and investment allowance claims.

Ownership for depreciation purposes is not confined to a completed registered conveyance where the assessee has purchased and is using business premises; beneficial ownership and user were treated as sufficient, so depreciation was allowed. A diagnostic centre using plant and machinery with qualified assistance was treated as carrying on business that produced commercially valuable outputs such as reports, X-ray pictures, scans and ECGs; those outputs were regarded as articles or things, so the machinery qualified for investment allowance. The article accordingly states that both the depreciation claim and the investment allowance claim were upheld in favour of the assessee.

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Issues: (i) Whether depreciation was allowable on a shop purchased under an agreement of sale though the conveyance deed had not been executed or registered in the assessee's favour. (ii) Whether the diagnostic centre's activities and equipment entitled the assessee to investment allowance on the ground that the centre was engaged in manufacture or production of an article or thing.

Issue (i): Whether depreciation was allowable on a shop purchased under an agreement of sale though the conveyance deed had not been executed or registered in the assessee's favour.

Analysis: The claim for depreciation turned on the meaning of "owner" for the purpose of depreciation. The governing principle applied was that, for income-tax purposes, ownership is not confined to a completed registered conveyance where the assessee has purchased and is using the building for business. The earlier judicial view relied on by the revenue was distinguished, and the reasoning accepted that the assessee's beneficial ownership and user of the premises were sufficient for depreciation.

Conclusion: The assessee was entitled to depreciation, and the revenue's objection failed.

Issue (ii): Whether the diagnostic centre's activities and equipment entitled the assessee to investment allowance on the ground that the centre was engaged in manufacture or production of an article or thing.

Analysis: The activity of the diagnostic centre was treated as business rather than a purely professional occupation because the centre used plant and machinery with qualified assistance to generate a commercially valuable end-product. The reports, X-ray pictures, scans, ECGs and similar outputs were treated as "articles or things" produced by the business. On that footing, the machinery used in the diagnostic centre fell within the scope of investment allowance. The reasoning adopted a broad commercial understanding of production and rejected the view that diagnostic services were merely professional services outside the statutory benefit.

Conclusion: The assessee was entitled to investment allowance on the machinery used in the diagnostic centre, and the revenue's objection failed.

Final Conclusion: The appeals raised by the revenue did not succeed, as both the depreciation claim and the investment allowance claim were upheld in favour of the assessee.

Ratio Decidendi: For income-tax purposes, a purchaser in possession and user of business premises may be treated as owner for depreciation even without a registered conveyance, and a diagnostic centre using plant and machinery to generate commercially valuable outputs can amount to a business producing an article or thing for investment allowance purposes.

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