INCOME TAX - Depreciation - Whether the assessee was the owner of the plant for the purpose of Section 32 of the Act - Held, yes - The assessee was the owner of the plant for the purpose of Section 32 and by leasing it cut to the WPIL, the assessee had used the plant wholly for the purpose of its business namely, for the purpose of carrying on the business of leasing and as such the income earned thereout by way of a rental of the plant was a business income. Thus, the ingredients of ownership and user of the plant in business, as required under Section 32 of the Act, having been fulfilled, the assessee was entitled to depreciation available to it under Section 32 of the Act.

Fact of the Case:

The assessee, a leasing and finance company, acquired a plant and leased it to WPIL. SIL, the owner of the premises where the plant was set up, had a right to purchase the plant after a stipulated period of time. The AO denied depreciation on the ground that the assessee was not the owner of the plant. The CIT(A) upheld the AO's order. On appeal, the Tribunal held that the assessee was not the owner of the plant and was not entitled to depreciation.

Finding of the Court:

The Court held that the assessee was the owner of the plant for the purpose of Section 32 of the Act and was entitled to depreciation. The Court relied on the following principles: * The term "owned" occurring in Section 32 must be assigned a wider meaning. * Anyone in possession of a property in his own title exercising such dominion over the property as would enable others being excluded therefrom and having the right to use and occupy the property and/or to enjoy its usufruct in his own right would be the owner though he may not have formal documents recognized as documents of title under the provisions of the respective laws governing the subject. * A person having acquired possession over a property in his own right uses the same for the purpose of business though a legal title may not have been conveyed to him can be construed to be owned by the assessee. * If it is proved that it is so owned and is used for the purpose of business, the benefit of Section 32 cannot be denied.

Issues: 1. Whether the finding of the Tribunal that the assessee was not the owner of the said plant is perverse having been arrived at by ignoring the relevant materials and taking into consideration irrelevant and extraneous considerations and such finding is otherwise arbitrary? 2. Whether the Tribunal having found that the lease dt. 30th Dec., 1994 was not a colourable transaction and was legally valid could hold that the assessee was not the owner of the said plant? 3. Whether the Tribunal could hold that the assessee was not the owner of the said plant and was not entitled to depreciation thereon when neither WPIL nor SIL claimed any ownership of the said plant and claimed any depreciation thereon? 4. Whether the claim for depreciation on the said plant could be denied when the rental income therefrom was assessed?

Ratio Decidendi: The Court held that the assessee was the owner of the plant for the purpose of Section 32 of the Act and was entitled to depreciation. The Court relied on the following principles: * The term "owned" occurring in Section 32 must be assigned a wider meaning. * Anyone in possession of a property in his own title exercising such dominion over the property as would enable others being excluded therefrom and having the right to use and occupy the property and/or to enjoy its usufruct in his own right would be the owner though he may not have formal documents recognized as documents of title under the provisions of the respective laws governing the subject. * A person having acquired possession over a property in his own right uses the same for the purpose of business though a legal title may not have been conveyed to him can be construed to be owned by the assessee. * If it is proved that it is so owned and is used for the purpose of business, the benefit of Section 32 cannot be denied.

Final Decision: The Court allowed the appeal and set aside the finding of the Tribunal that the assessee was not the owner of the plant and the ultimate decision. The rest of the finding was affirmed.