2017 (3) TMI 944

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....yesha Beevi (wife of Dr. M. Ali); (3) Nisha, (4) Shabna and (5) Sharmini (all children of Dr. M. Ali and Dr. Ayesha Beevi); (6) Khadeeja Beevi (mother of Dr. M. Ali); (7) and Akbar Ali (father of Ayesha Devi). Out of the total capital of Rs. 1,33,63,520/- of the company, the value of the shares held by Khadeeja Beevi and Akbar Ali were Rs. 5,000/- each. The company was running a super speciality hospital in Thrissur Town in Central Kerala. Earlier a partnership firm Mother Hospital had been constituted by Dr. M. Ali, Dr. Ayesha Beevi and their three children. 4.3 acres of land belonged to the firm. The purpose of the partnership firm was to run a super speciality hospital and, accordingly, the firm started construction of the hospital buil....

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....to the firm. The one time building tax payable by the owner of a building under the Kerala Building Tax Act was also paid by the company. Since the ownership of the land had to remain with the firm, it was also agreed that the land would be given on lease by the firm to the company and agreement dated 01.02.1989 provided for the said contingency as well in clause 4(g) which reads as under: "(g) In consideration of the FIRM agreeing with the COMPANY to permit situation of the hospital building or any additions thereto belonging to the FIRM as aforesaid, the COMPANY shall pay to the FIRM a ground rent of Rs. 100/- per month, but however that the liability to pay such ground rent shall be on and from the 1st day of April 93 only." The fir....

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.... on a proper stamp paper and is also duly registered with the sub-Registrar. Nothing of the sort took place. In the absence thereof, it could not be said that the assessee had become the owner of the property. Before us another argument is raised by the learned counsel appearing for the appellant. It is submitted that having regard to clause 4(g), the appellant had become the lessee of the property in question and since the construction was made by the appellant from its funds, by virtue of explanation (1) to Section 32 of the Income Tax Act, the assessee was, in any case, entitled to claim depreciation. This explanation reads as under: "32(1) ........................ Explanation 1. Where the business or profession of the assessee....