H.N.Seth, J. - (1.) At the instance of the revenue, the Income-tax Appellate Tribunal, Allahabad, has, in respect of assessment of the assessee, U.P. State Agro Industrial Corporation Ltd., Lucknow, for the assessment year 1972-73, stated the case and referred the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the assessee was entitled to depreciation on building which it purchased from the Government of Uttar Pradesh ?"
(2.) The assessee, U.P. Agro Industrial Corporation Ltd., Lucknow (hereinafter referred to as "the Agro Corporation") was set up in the month of March, 1947, as a body registered under the Indian Companies Act. Capital of the Agro Corporation was subscribed equally by the Govt. of India and the Govt. of Uttar Pradesh. The State Govt. vide its order No. 1748/XII-J-246/67, dated April 27, 1968, transferred possession over the Agricultural Workshop, Lucknow, and Pilot Project, Karimganj to the Agro Corporation in consideration of Rs. 44,07,589 (Rs. 40,00,000 worth of equity shares and Rs. 4,07,589 paid in cash). During the assessment proceedings, the Agro Corporation, inter alia, claimed allowance by way of depreciation under Section 32 of the I.T. Act, in respect of the buildings taken over by it from the State Govt.
(3.) The ITO disallowed the aforesaid claim for depreciation on the ground that the properties in respect of which the claim had been made were immovable properties. Since no sale deed had been executed by the State Govt. till then, the Agro Corporation did not become its owner. It was accordingly not entitled to claim any depreciation allowance in respect of such property.;