TaxTMI 
TaxTMI 
2005 (8) TMI 34
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....ld be denied when the rental income therefrom was assessed? Section 32: Own : Ownership : Meaning of: The question is dependent on the interpretation of section 32 of the Income-tax Act, 1961 allowing depreciation to an assessee. The depreciation is available on the items mentioned in section 32 on satisfaction of the conditions that the plant was owned wholly or partly by the assessee and such plant was used for the purpose of his business. The law is well-settled. The terms "own", "ownership" and "owned" are generic and relative terms having a wide and also a narrow connotation. The meaning would depend on the context in which the terms are used. The decision in CIT v. Podar Cement Pvt. Ltd. [1997] 226 ITR 625 (SC) is the trend-setter in the concept of ownership. For the purpose of finding out the meaning of the term "owned" occurring in section 32(1) assistance may be drawn from the ratio laid down therein. The term "owned" occurring in section 32(1) must be assigned a wider meaning: Anyone in possession of a property in his own title exercising such dominion over the property as would enable others being excluded therefrom and having the right to use and occupy the proper....
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....ression "owned" for claiming the benefit of section 32 of the Act held that it was not necessary that the assessee should be a complete owner. By the words "complete owner", the Allahabad High Court meant, that title must have passed to the person claiming the benefit in the manner the law requires it to be. If an assessee is using a property otherwise also it can get its benefit. The court held that an assessee is nothing but the owner for the purpose of section 32 of the Act even if it is not the owner enjoying the lawful title by obtaining a document. The Calcutta High Court was called upon to consider a similar controversy in the case of Madgul Udyog v. CIT [1990] 184 ITR 484. The Calcutta High Court agreed with the decision of the Allahabad High Court and relied on the decision in R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (SC). The view taken was that for all intents and purpose the person in possession of the property saved by section 53A of the Transfer of Property Act is entitled to get the benefit of section 32. This decision took into consideration, section 9 of the old Income-tax Act, 1922, now section 22 of the 1961 Act. Reliance was also placed on CIT v. Sahn....
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....T v. Shaan Finance (P.) Ltd. [1998] 231 ITR 308 (SC), cited by Mr. Bajoria, it was held that a leasing or finance company, which owns machinery and leases it to third party, who uses the machinery for manufacture of articles or things, (the company) is entitled to investment allowance in respect of such machinery under section 32A. Admittedly, identical ingredients of ownership and user for the purpose of business, as are required for the purpose of section 32 are required for obtaining the benefit under section 32A. A machinery if given on hire by the owner to the hirer on payment of hire charges the income derived by the owner would be business income. In the language of the court (Shaan Finance (P.) Ltd. [1998] 231 ITR 308 (SC)) (headnote): "Therefore, a leasing or finance company, which owns machinery and leases it to third parties who use the machinery for manufacture of articles or things as specified in section 32A(2)(b)(iii), is entitled to investment allowance in respect of such machinery under section 32A. When machinery is given on hire by the owner to the hirer on payment of hire charges, the income derived by the owner is business income. The hirer, on the other ....
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.... and contrasted for the purpose of drawing a comparison to illustrate the conferment of title or ownership. Mr. Shome disputed the same on the ground that the plant being a movable property reference to those provisions would be wholly misplaced. The submission of Mr. Shome might have some substance so far as the applicability of the provisions of the TP Act is concerned since it does not apply to movable property. But that does not preclude the court from drawing an inference or analogy or from comparing or contrasting the said principles for the purpose of deciding the question of ownership. By reason of the provisions contained in the Transfer of Property Act (the TP Act) and the Registration Act an immovable property valued above Rs. 100 can be transferred only through a document registered under the Registration Act. Even in such cases where a registered document is the basis of acquiring title the Transfer of Property Act makes provisions under section 53A that a delivery of possession cannot be questioned by the person who delivered the possession and if he acquires title then he would be bound by such transaction and the title of the transferee would then become complete an....
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....tikosh [1991] 190 ITR 578 (Cal)) it was held: "That the assessee-trust had no implied power to donate any of its assets. The shares received by the assessee had not been given for any specific purpose and there was no trust within trust. However, the donation of shares was not void but voidable. The transfer of the shares by the assessee-trust to the donee-trust was consented to by the major beneficiaries of the assessee. Although the consent on behalf of the minor beneficiaries was not taken at the relevant time, all of them, on attaining majority, never disputed the donation and had acquiesced therein. The donation was valid and the Income-tax Department, being a stranger to the transaction, had no authority in law to treat the transaction as void. The donation of the shares by the assessee-trust in March, 1964, being valid and binding on all parties, the income therefrom after the date of donation could not be assessed in the hands of the assessee-trust. There is a basic difference between a void act or nullity and a voidable act. So far as a void act or nullity is concerned, it has no existence in the eye of law since its very inception. Nullity or a void act cannot be cured....