| Case ID |
0c080691-4d4d-4782-a5bd-200d826efd01 |
| Body |
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| Case Number |
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| Decision Date |
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| Hearing Date |
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| Decision |
The tribunal upheld the assessee's entitlement to depreciation despite the absence of a registered conveyance deed. It was determined that ownership was established through the usage and control of the property for business purposes, aligning with the provisions of Section 32 of the Income-tax Act, 1961. This decision reinforces the interpretation that legal title completion is not a sole determinant of ownership for depreciation claims, emphasizing the practical control and benefits derived from the property. |
| Summary |
In the landmark case of Commissioner of Income Tax v. Sahani Steel & Press Works Ltd. (1987 SLD 3500 = (1987) 168 ITR 811), the Supreme Tribunal deliberated on the intricate aspects of property ownership and depreciation under the Income-tax Act, 1961. Central to this case was the question of whether an assessee could claim depreciation on a business property without a fully registered conveyance deed. Despite the conveyance deed not being registered in the relevant previous year, the tribunal affirmed the assessee's right to depreciation, highlighting that effective ownership stems from the ability to utilize and benefit from the property for business operations. This interpretation aligns with the precedent set in R.B. Jodha Mal Kuthiala v. CIT, where the Supreme Court emphasized the entitlement to income from the property as a test for ownership. Furthermore, the decision references pivotal cases like CIT v. Bijli Cotton Mills Ltd. and CIT v. Steelcrete (P.) Ltd., reinforcing the stance that practical control and use of the property play a crucial role in determining ownership for tax purposes. The ruling underscores the importance of equitable considerations in tax law, ensuring that businesses can leverage their assets effectively even in the absence of formal legal titles. This case serves as a critical reference for tax professionals and businesses in understanding the nuances of property ownership and depreciation claims, offering clarity and guidance in similar future litigations. By prioritizing the functional control and benefit derived from business assets, the tribunal ensures a balanced and just interpretation of tax laws, fostering a conducive environment for business operations and compliance. |
| Court |
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| Entities Involved |
Commissioner of Income Tax,
Sahani Steel & Press Works Ltd.
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| Judges |
K. RAMASWAMY,
M.N. RAO
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| Lawyers |
M. Suryanarayanamurthy
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| Petitioners |
Commissioner of Income Tax
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| Respondents |
Sahani Steel & Press Works Ltd.
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| Citations |
1987 SLD 3500,
(1987) 168 ITR 811
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| Other Citations |
R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (SC),
CIT v. Bijli Cotton Mills Ltd. [1953] 23 ITR 278 (All.),
CIT v. Steelcrete (P.) Ltd. [1983] 142 ITR 45 (Cal.),
Addl. CIT v. U.P. State Agro Industrial Corpn. Ltd. [1981] 127 ITR 97 (All.),
Smt. Kala Rani v. CIT [1981] 130 ITR 321 (Punj. & Har.),
Nawab Sir Mir Osman Ali Khan v. CWT [1986] 162 ITR 888 (SC)
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| Laws Involved |
Income-tax Act, 1961,
Income-tax Act, 1922,
Wealth-tax Act, 1957
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| Sections |
32,
22,
9,
3,
2(m)
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