Commissioner of Income Tax vs Deepak Nitrite Ltd.

In the reference, the following question has been raised :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the assessee is entitled to grant of depreciation on factory building and office building though the conveyance deed in respect of these properties was not registered in favour of the assessee till the end of the accounting year relevant to the previous year under consideration ?"

It is not disputed that the assessee-company entered into an agreement on 3rd July, 1984, with Mafatlal Industries and it had to pay the total consideration of Rs. 1.21 crores to Mafatlal Industries in view of the agreements for its unit named as Sayadri Dyestuff. The assessee paid Rs. 1 crore at the time of the execution of the aforesaid agreement. The balance amount of Rs. 21 lacs was to be paid on execution and registration of the conveyance deed in favour of the assessee-company which was not done till the end of the accounting year under question. The Tribunal took the decision in favour of the assessee. In view of the decision of the apex Court in M/s Mysore Minerals Limited, M.G. Road, Bangalore Vs. The Commissioners of Income Tax, Karnataka, Bangalore, the learned counsel for the Revenue stated that the case is covered by the decision of the apex Court. The apex Court held as under :

"Held, reversing the judgment of the High Court, that the finding of fact arrived at in the case at hand was that though a document of title was not executed by the Housing Board in favour of the assessee, the houses were allotted to the assessee by the Housing Board, part-payment received and possession delivered so as to confer dominion over the property on the assessee whereafter the assessee had in its own right allotted the quarters to the staff and they were being actually used by the staff of the assessee. The assessee was entitled to depreciation in respect of the seven houses in respect of which the assessee had not obtained a deed of conveyance from the vendor although it had taken possession and made part-payment of the consideration."

In the instant case on payment of substantial amount, the assessee acquired the possession and is running the factory and in view of these facts, the answer must be in the affirmative and in favour of the assessee and against the Revenue.

So far as Tax Appeal No. 150 of 1999 is concerned, in view of our decision in IT Ref. 23 of 1996 the answer must be given in favour of the assessee and against the Revenue. The appeal stands dismissed with no orders as to costs. Copy of the order be placed in Tax Appeal No. 150 of 1999.