Court affirms petitioner's ownership of plant for depreciation, emphasizing lease doesn't negate ownership.

The court concluded that the petitioner was the owner of the plant for the purposes of section 32 and eligible for depreciation, overturning the Tribunal's findings. The court clarified that ownership under section 32 does not require formal title documents and emphasized that a valid lease does not negate ownership. The petitioner, engaged in leasing and finance, was entitled to depreciation as the plant was used for business purposes. The appeal was allowed, with no order as to costs, and parties were to receive a certified copy of the judgment.

---

---

Issues Involved:
1. Whether the Tribunal's finding that the petitioner was not the owner of the plant is perverse.
2. Whether the Tribunal could hold that the petitioner was not the owner despite the lease being legally valid.
3. Whether the Tribunal could deny depreciation when neither WPIL nor SIL claimed ownership.
4. Whether the claim for depreciation could be denied when rental income was assessed.

Issue-wise Analysis:

Issue 1: Tribunal's Finding on Ownership
The Tribunal's finding that the petitioner was not the owner of the plant was challenged as perverse. The court examined the interpretation of section 32 of the Income-tax Act, 1961, which allows depreciation for items owned wholly or partly by the assessee and used for business purposes. The terms "own," "ownership," and "owned" were discussed, emphasizing a broader interpretation where possession and control over the property could imply ownership. Citing cases like CIT v. Podar Cement Pvt. Ltd. and Mysore Minerals Ltd. v. CIT, the court concluded that ownership under section 32 does not necessarily require formal title documents.

Issue 2: Lease Validity and Ownership
The Tribunal had found the lease dated December 30, 1994, to be legally valid but still held that the petitioner was not the owner. The court disagreed, stating that a valid lease does not negate ownership. The petitioner, engaged in leasing and finance, had acquired and leased the plant to WPIL. The Tribunal's reasoning that SIL's right to purchase the plant affected the petitioner's ownership was rejected. The court emphasized that a lease does not transfer ownership to the lessee, and the lessor retains ownership.

Issue 3: Depreciation Claim and Ownership
The Tribunal denied depreciation on the grounds that neither WPIL nor SIL claimed ownership. The court found this reasoning flawed. WPIL treated the rental payments as revenue expenditure, not claiming ownership or depreciation. SIL also did not claim ownership or depreciation. The court held that the petitioner, as the owner, was entitled to depreciation under section 32, as the plant was used for business purposes.

Issue 4: Depreciation Claim Despite Rental Income Assessment
The Tribunal's denial of depreciation despite assessing rental income was challenged. The court noted that the income from leasing the plant was business income, fulfilling the requirements of section 32 for claiming depreciation. The petitioner used the plant wholly for its leasing business. The court concluded that the petitioner was entitled to depreciation as the plant was owned and used for business purposes.

Conclusion:
The court concluded that the petitioner was the owner of the plant for the purposes of section 32 and had used it for business, making the petitioner eligible for depreciation. The Tribunal's findings were set aside, and the appeal was allowed. The court answered the questions as follows:
- Question 1: Affirmative.
- Question 2: Negative.
- Question 3: Negative.
- Question 4: Negative.

There was no order as to costs, and a Xerox certified copy of the judgment was to be made available to the parties on usual terms.

---