Commissioner of Income Tax vs Tamil Nadu Small Industries Corporation Ltd.

Thanikkachalam, J.—At the instance of the Department, the following common question was referred to us for our opinion for the assessment years 1974-75 and 1977-78 u/s 256(1) of the Income Tax Act, 1961 :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the registration of con-veyance deed transferring certain buildings by the Government to the assessee is not required and that depreciation on such building should be granted to the assessee as an owner ?"

At the time of its formation, the assessee-company, a concern wholly owned by the Tamil Nadu Government, had taken over the buildings from the small industrial undertakings formerly run by the Department of Industries and Commerce of the State Government. The Income Tax Officer in the reassessment for the assessment years 1974-75 and 1977-78 disallowed the assessee''s claim for depreciation on the ground that there was no valid transfer of the buildings in the assessee''s favour in the absence of a registered document. Therefore, according to the Income Tax Officer, the assessee is not the legal owner of the assets. On appeal, the Commissioner of Income Tax allowed the claim made by the assessee. On further appeal, the Tribunal confirmed the order passed by the Commissioner of Income Tax. A similar question came up for consideration before this court as against the order passed in I.T.A. No. 1692 Madras of 1976-77 in the case of Commissioner of Income Tax Vs. Tamil Nadu Small Industries Development Corporation Ltd., wherein this court held that in the case of a Government grant no registration is necessary. In view of the above said decision of this court cited supra, we are of the opinion that there is no infirmity in the order passed by the Tribunal. Accordingly, we answer the question in both the assessment years under consideration in the affirmative and against the Department will be no order as to costs.