High Court Of Rajasthan
CIT vs. Mohd. Bux Shokat Ali
Sections 32(1), 256(2)
Asst. year 1987-88
Rajesh Balia & S.K. Garg, JJ.
DB IT Ref. No. 27 of 1995
13th February, 2001
Sundeep Bhandawat, for the Applicant : Anjay Kothari, for the Respondent
BY THE COURT :
Heard learned counsel for the parties.
2. This is an application under s. 256(2) of the IT Act, 1961, requiring this Court to direct the Appellate Tribunal, Jaipur Bench, Jaipur, to state the case and refer the following two questions of law said to be arising out of the Tribunalâs order, dt. 8th Jan., 1991, passed in ITA No. 5/Jp/90 and 1611/Jp/89 for the asst. yr. 1987-88 :
(1) Whether, on the facts and in the circumstances of the case the Tribunal was legally justified in directing to allow depreciation on the vehicles which were not registered in the name of the assessee-firm ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was legally right in observing that assessment framed in the case of this assessee should be treated as substantive and not protective specially in view of the fact that while completing the assessment in the case of firm consisting of 6 partners has established beyond doubt that assessee- firm was only benami of M/s Mohd. Bux Shokat Ali 6 partners ?
The first question relates to allowing the depreciation on the vehicles in the assessment of the firm where the vehicles were not registered in the name of the assessee-firm but were registered in the name of one of the partners of the firm. The Tribunal has refused to refer the aforesaid question while rejecting the application under s. 256(1). Learned counsel for the Revenue has urged that since similar question has earlier been directed by this Court to be referred in DB IT Ref. Appln. No. 31/98, decided on 22nd Feb., 2000, following the aforesaid decision this application may also be allowed in respect of the aforesaid question No.
1. We are of the opinion that though the aforesaid question is a question of law, the answer is self-evident and settled by the decision of the Supreme Court and is not required to be made subject-matter of a reference. Sec. 32 of the IT Act lays down the conditions for claiming deduction on account of depreciation of the building, plant and machinery which are used for the purposes of business of the assessee. The first condition is that such building, plant and machinery must be owned by such assessee and secondly that such asset must be used for the purpose of business of the assessee. So far as the fact that vehicles in question were used for the purposes of business of the respondent-firm having eight partners, is a finding of fact and is not challenged. So far as ownership of the vehicle is concerned, the finding reached by the Tribunal in this regard is that consideration for purchase of such vehicles has been met by the firm consisting of eight partners and debited to the books of account of the firm only. It is also finding of fact arrived at by the Tribunal that the vehicles have been exclusively used for the purpose of business of the firm. It is merely because the vehicle has been registered under the Motor Vehicles Act in the name of one of the partners only, would not deprive firm of the ownership of the vehicle which is not a distinct from its partners.
5. It has been brought to our notice by the learned counsel for the respondent that the principle has been settled by the Supreme Court while considering the question of ownership of an asset subject to claim of depreciation allowance under s. 32 of the Act in Mysore Minerals Ltd. vs. CIT (1999) 156 CTR (SC) 1, wherein the Court was considering the case of building which was in possession of the assessee-company, the possession having been acquired on payment of price but actually deed of conveyance was not executed by the Housing Board in favour of the company, thus there was no vesture of legal title of the company in terms of the Transfer of Property Act required for transfer of ownership. Yet considering the meaning of word “owned” as used in s. 32, the Court answered the question. The Court posed a question for itself : “It is the word âownedâ as occurring in sub-s. (1) of s. 32 which is the core of controversy. Is it only an absolute owner or an owner of the asset as understood in its legal sense who can claim depreciation ? Or, a vesting of title short of full-fledged or legal ownership can also entitle an assessee to claim depreciation under s. 32 ?” Then the Court after considering the various aspects of the terms âownershipâ concluded that : “In our opinion, the term âownedâ as occurring in s. 32(1) of the IT Act, 1961, must be assigned a wider meaning. Anyone in possession of property in his own title exercising such dominion over the property as would enable others 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. …….”
6. 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 s. 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 his 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. Thus the principle has been settled by the Supreme Court and on the application of the aforesaid principle the answer in the present case to the question raised is self- evident on the facts found by the Tribunal. We, therefore, declined to require the Tribunal to refer the aforesaid question of law to this Court notwithstanding that it is being a question of law.
7. It may be noticed that merely because a question of similar nature has earlier been referred to this Court by the Tribunal or has been made subject-matter of reference by issuing direction under s. 256(2) neither operates as res judicata nor binds the Court at later stage to answer that question if the Court is of the opinion that no question of law arises.
8. So far as the second question is concerned, the same is founded on the basis of findings recorded by the assessing authority that the respondent-firm is a benami for another firm of M/s Mohd. Bux Shokat Ali consisting of six partners only. This finding of the assessing authority has also been upturned by the Tribunal by holding that the firm consisting of eight partners is a genuine firm and not benami. The finding on the question whether the firm is a genuine is finding of fact and gives rise to no question of law except in cases where the finding has been challenged to be perverse or based on no material or on irrelevant considerations. Such being not the case, in our opinion, the Tribunal was right in rejecting the application under s. 256(1) in respect of second question also. Accordingly, this application fails and is hereby dismissed. No orders as to costs.
[Citation : 256 ITR 357]