Madras High Court
Commissioner Of Income Tax-I vs M/S.L&T Transportation on 8 February, 2022
T.C.A.No.17 of 2012
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 08.02.2022
CORAM :
THE HON'BLE MR. JUSTICE R. MAHADEVAN
AND
THE HON'BLE MR. JUSTICE J.SATHYA NARAYANA PRASAD
T.C.A.No.17 of 2012
Commissioner of Income Tax-I,
Chennai. ... Appellant
Versus
M/s.L&T Transportation
Infrastructure Limited,
Post Box No.979,
Mount Poonamallee Road,
Manapakkam,
Chennai – 603 089. ... Respondent
Appeal preferred under Section 260A of the Income Tax Act, 1961,
against the order of the Income Tax Appellate Tribunal, Chennai, “A” Bench,
dated 22.07.2011 in I.TA.No.1696/Mds/2010.
For Appellant : Mr.Karthik Ranganathan,
Senior Standing Counsel
For Respondent : Mr.N.V.Balaji
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T.C.A.No.17 of 2012
JUDGMENT
(Judgment of the Court was delivered by R.MAHADEVAN, J.)
This tax case appeal has been filed by the appellant / Revenue,
challenging the order dated 22.07.2011 passed by the Income Tax Appellate
Tribunal, Bench 'A', Chennai, in I.TA.No.1696/Mds/2010, relating to the
assessment year 2007-08.
2. By order dated 06.03.2012, this court admitted the aforesaid tax
case appeal on the following substantial question of law:
“Whether on the facts and in the circumstances of the
case, the Income Tax Appellate Tribunal was right in holding
that the assessee was entitled claim depreciation at the rate of
10% applicable to buildings on the roads and bridge developed
and maintained by the assessee under the terms of “Build,
Operate and Transfer (BOT) agreement with the Government
even though as per the terms of the agreement the assessee
could not be considered as the owner of the assets?”.
3. When the matter was taken into consideration, the learned counsel
for the appellant/Revenue as well as respondent/assessee jointly submitted that
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T.C.A.No.17 of 2012
the substantial question of law involved in this appeal has already been
considered and decided in favour of the assessee, in the light of the judgment
of the Hon'ble Supreme Court in Principal Commissioner of Income Tax Vs.
GVK Jaipur Expressway Ltd., reported in [(2018) 100 taxmann.com (SC) ],
the relevant passage of which, is usefully extracted hereunder:
“14. In our opinion the term owned as occurring
in Section 32 (I) of the Income-tax Act, 1961 must be
assigned a wider meaning. Any one in possession of
property in his own title exercising such dominion over
the property as would enable other being excluded
therefrom and having right to use and occupy the
property and/or to enjoy its usufruct in his own right
would be the owner of the buildings though a formal
deed of title may not have been executed and registered
as contemplated by Transfer of Property Act,
Registration Act, etc. 'Building owned by the assessee'
the expression as occurring in Section 32(1) of the
Income-tax Act means the person who having acquired
possession over the building in his own right uses the
same for the purposes of the business or profession
though a legal title has not been conveyed to him
consistently with the requirements of laws such as
Transfer of Property Act, and Registration Act, etc. but
nevertheless is entitled to hold the property to the
exclusion of all others.
15. Generally speaking depreciation is an
allowance for the diminution in the value due to wear
and tear of capital asset employed by an assessee in his
business. Black's Law Dictionary (Fifty Edn.) defines
depreciation to mean, inter alia:
A fall in value, reduction of worth. The
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T.C.A.No.17 of 2012
deterioration or the loss or lessening in value, arising
from age, use, and improvements, due to better
methods. A decline in value of property caused by
wear or obsolescence and is usually measured by a set
formula which reflects these elements over a given
period of useful life of property.... Consistent gradual
process of estimating and allocating cost of capital
investments over estimated useful life of asset in order
to match cost against earnings.....
19. It is well-settled that there cannot be two
owners of the property simultaneously and in the same
sense of the term. The intention of the Legislature in
enacting Section 32 of the Act would be best fulfilled by
allowing deduction in respect of depreciation to the
person in whom for the time-being vests the dominion
over the building and who is entitled to use it in hos
own right and is using the same for the purposes of his
business or profession. Assigning any different
meaning would not subserve the legislative intent. To
take the case at hand it is the appellant-assessee who
having paid part of the price, has been placed in
possession of the houses as an owner and is using the
buildings for the purpose of its business in its own
right. Still the assessee has been denied the benefit of
Section 32. On the other hand, the Housing Board
would be denied the benefit of Section 32 because
inspite of its being the legal owner it was not using the
building for its business or profession. We do not think
such a benefit-to-none situation could have been
intended by the Legislature. The finding of fact arrived
at in the case at hand is that though a document of title
was not executed by Housing Board in favour of the
assessee, but 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
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T.C.A.No.17 of 2012
its own right allotted the quarters to the staff and they
were being actually used by the staff of the assessee. It
is common knowledge, under the various scheme
floated by bodies like housing boards, houses are
constructed on large scale and allotted on part
payment to those who have booked. Possession is also
delivered to the allottee so as to enable enjoyment of
the property. Execution of document transferring title
necessarily follows if the schedule of payment is
observed by allottee. If only the allottee may default
the property may revert back to the Board. That is a
matter only between the Housing Board and the
allottee. No third person intervenes. The part payment
made by allottee are with the intention of acquiring
title. The delivery of possession by Housing Board to
allottee is also a step towards conferring ownership.
Documentation is delayed only with the idea of
compelling the allottee to observe the schedule of
payment.”
4. Following the aforesaid decision, wherein, it was categorically held
by the Hon'ble Supreme Court that “the assessee is entitled to claim
depreciation of public roads treating it as building”, we answer the
substantial question of law raised herein against the appellant/Revenue and in
favour of the respondent / assessee and accordingly, dismiss the tax case
appeal. No costs.
(R.M.D., J.) (J.S.N.P., J.)
vm/kas 08.02.2022
R. MAHADEVAN, J.
and
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T.C.A.No.17 of 2012
J.SATHYA NARAYANA PRASAD, J.
vm/rk
Internet : Yes
Index : Yes / No
To
1. The Income Tax Appellate Tribunal,
Chennai, “A” Bench.
2. The Commissioner of Income Tax - I ,
Chennai.
3. The Income Tax Officer,
Company Circle II(4),
Chennai 600 034.
T.C.A.No.17 of 2012
08.02.2022
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