- (1.) THE Tribunal, New Delhi, has referred the following question of law under s. 256(1) of the IT Act, hereinafter referred to as the Act, for opinion to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee -firm was eligible for claiming depreciation in respect of temporary sheds which were transferred to the assessee by M/s Guru Nanak Dairy by way of book entries and without registered conveyance deed -
(2.) THE present reference relates to the asst. yr. 1978 -79.
(3.) BRIEFLY stated the facts giving rise to the present reference are as follows : According to the respondent, certain temporary sheds which originally belonged to Guru Nanak Dairy were transferred to it through book entries at a cost of Rs. 30,456. The conveyance deed in respect of transferring these sheds was not executed. The respondent claimed depreciation on the ground that it was owner of the sheds. The ITO did not accept the plea, which order was upheld by the CIT(A). Feeling aggrieved the respondent preferred second appeal before the Tribunal. Before the Tribunal, it was submitted on behalf of the respondent that depreciation should have been allowed to the respondent in respect of the sheds and it is not necessary that for claiming depreciation under s. 32 of the Act, a registered conveyance deed should be in existence. It was also pointed out that in respect of asst. yrs. 1977 -78 and 1981 -82 depreciation has been allowed by the CIT(A). The claim of the respondent was resisted on behalf of the Revenue on the ground that for claiming ownership of the sheds in question, a registered conveyance deed is a precondition and in the absence of it the respondent cannot claim to be its owner. Reliance was placed on a decision of the Supreme Court in the case of Late Nawab Sir Mir Osman Ali Khan vs. CWT (1986) 57 CTR (SC) 89 : (1986) 162 ITR 888 (SC). The Tribunal after considering the rival submissions and after going through the decisions cited by the respective parties has allowed the appeal on the following grounds : "We have given careful consideration to the facts of the case and the rival submissions. The expression 'building owned by the assessee' used in s. 32 of the 1961 Act has been interpreted by their Lordships of the Hon'ble Allahabad High Court, and it appears from the tenor of the order of their Lordships that, according to them, the phrase 'owned by the assessee' would have slightly different connotation, when used in s. 32, then the meaning of the said term as used in s. 22 of the IT Act, 1961. It is true that their Lordships were not aware of the opinion of the Lordships of the Supreme Court as expressed in the case of Late Nawab Sir Mir Osman Ali Khan vs. CWT (1986) 57 CTR (SC) 89 : (1986) 162 ITR 888 (SC) (for it has been rendered only very recently) yet it would be wrong on our part to hold that the views expressed by their Lordships regarding the meaning of the terms 'building owned by the assessee' in the context of s. 32 are not correct, because they do not squarely fall within the terms of the ratio of the Late Nawab Sir Mir Osman Ali Khan's case (supra). The contention of the learned counsel for the assessee that the ratio of the Late Nawab Sir Mir Osman Ali Khan's case (supra) was rendered in a different context may be technically correct, but, according to us, their Lordships have not left any room for doubt as to what they meant and, according to them, so is our understanding, the immovable property was conveyed through a registered conveyance deed. If the judgment of the Hon'ble Allahabad High Court in Addl. CIT vs. U.P. State Agro Industrial Corpn. Ltd. (1981) 20 CTR (All) 141 : (1981) 127 ITR 97 (All) were not there, we would unhesitatingly confirm the order of the learned CIT(A). But, in the fact of the observations of the Hon'ble Allahabad High Court in the case of U.P. State Agro Industrial Corpn. Ltd. (supra) noted above, we refrain from giving that finding. As noted earlier, the opinion of their Lordships is that the meaning of the term in s. 32 is different from what it is in s. 22, that being the law obtaining in the State of Uttar Pradesh, we feel that we are obliged to follow it, whether according to our opinion, it may be correct or not. We, therefore, respectfully follow the judgment of the Hon'ble Allahabad High Court in U.P. State Agro Industrial Corpn. Ltd. (supra) and hold that for the purpose of s. 32 the assessee should be held as owning the temporary sheds whose possession it had and for which it had paid the value to the transferors. Accordingly, we reverse the order of the learned CIT(A) and direct the ITO to grant depreciation to the assessee." We have heard Shambhoo Chopra, learned standing counsel for the Revenue and Sri Gaurav Mahajan, learned counsel appearing for the respondent -assessee.;