ADDL COMMISSIONER OF INCOME TAX Vs. HINDUSTAN COLD STORAGE AND REFRIGERATION
LAWS(DLH)-1983-8-2
HIGH COURT OF DELHI
Decided on August 03,1983

ADDL COMMISSIONER OF INCOME TAX Appellant
VERSUS
HINDUSTAN COLD STORAGE AND REFRIGERATION Respondents




JUDGEMENT

Prakash Narain, J. - (1.)THE Tribunal Delhi Bench(c) has referred to this Court the following question of law for its opinion :
"Whether on the facts and circumstances of the case, the assessee company is entitled to claim depreciation under s. 32(1) of the IT Act, 1961 in respect of building machinery and plant of the Crown four Mills, Delhi. "

(2.)THE assessee is a private limited company running a cold storage and Flour Mills. THE relevant year for which the question arises is the asst. yr. 1962-63.. the accounting year being the calendar year 1961. THE assessee is a subsidiary of another private limited company known as Meattles (P) Ltd. the latter company carried on the business of speculation in shares and other commodities and also the business of running the four mills know as Crown Four Mills. Meattles (P) Ltd. decided to transfer the Crown Flour Mills to the assessee. THE assessee also considered the proposal to start this business. On 1st Feb., 1957 the board of Director of Meattles (P) Ltd. passed a resolution approving the draft agreement for sale of the Crown Flour Mills to the assessee for a consideration of Rs. 8,75,000 by accepting equity shares of an equal amount of the assessee company and to sell the stock in trace and other assets and liabilities of Crown Flour Mills for a sum of Rs. 3,75,063 to the assessee, which price was to be shown as paid in the form of a loan advanced to the assessee on an interest of 5 per cent per annum. THE Board of Directors of the assessee by its resolution dt. 1st Feb., 1957 approved the decision to purchase the Crown Flour Mills on the above terms and conditional THE resolution also approved of the taking offer the possession of the Crown Flour Mills with immediate effect and for giving necessary information of the change of proprietorship there of the parties concerned as well as to the government Department. In pursuance of the aforesaid two resolution two separate agreements were executed between the two companies on 1st Feb. 1957, on relating to the sale of the Crown Flour Mills for Rs. 8,75,000 and the second relating to the sale of stock in trade and other movable. Actual possession of the Crown Flour Mills was taken over by the assessee on 1st Feb., 1957. It is finding of fact given by the Tribunal and mentioned in the statement of case for this court that the sale deed was not executed even till the end of the accounting year relevant to the asst. yr. 1962-63 i.e, there was no sale deed executed till 31st Dec., 1961.
In its return for the asst. yr. 1962-63, i.e. the assessee claimed depreciation on the assets of the Crown Flour Mills. The ITO rejected this claim. The AAC allowed the claim on appeal. The Tribunal on further appeal upheld the decision of the AAC. The CIT sought as reference on the question of law contending that the assessee could not clam depreciation for an asset of which it was not the owner in the relevant accounting year. The Tribunal accepting the application of the CIT has made the present reference.

No one has put in appearance on behalf of the assessee despite actual date notice. We have, therefore, proceeded to hear counsel for the revenue export.

In our opinion the question raised is no longer res integra. The identical claim of he same party for the asst. yr. 1958-59 was considered by a Bench of this Court which decision is reported as CIT vs. The Hindustan Cold Storage and Refrigerator (P) Ltd. 1976 CTR (Del) 78 : (1976) 103 ITR 455 (Del). It was held that the words being the property of the assessee had the same meaning a the words owned by the assessee appearing in s. 32(1) of the IT Act, 1961 and these words merely clarified the position tht already existed under s. 10(2)(iv) of the 1922 Act. The interest which a person had in the property by virtue of s. 53A of the Transfer of Property Act did not amount to ownership of the property. The Crown Flour Mills constituted immovable property of more than Rs. 100 in value and title thereto could not pass to the assessee in the absence of a registered sale deed. As admittedly no sale deed was executed in favour of the assessee during the previous year relevant to the assessment year, the title to the Crown four Mills did not pass to the assessee. Thus the Crown Flour Mills was not the property of the assessee of the conditions prescribed under the relevant provisions of law was not satisfied and the assessee was not entitled to depreciation in changed even for the asst. yr. 1962-63. Agreeing with the bench decision referred to above, we answer the question referred to us in the negative, against the assessee and in favour of the revenue.

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