(Appeal by special leave from the judgment and order, dated February 10, 1997 of the Madras High Court in T.C. No.316 of 1982).

Income-tax---

----Depreciation---Development rebate---Condition precedent---Ownership of assets---Government order vesting possession of rice mills in assessee in 1972---Sale-deeds executed only in 1978---Assessee not owner of mills and not entitled to depreciation and development rebate for assessment years 1973-74 and 1974-75---Indian Income Tax Act, 1961, Ss.32 & 33.

Certain Government orders were issued in 1972 vesting possession of 13 mills with the assessee. But the sale-deeds in relation thereto were executed in 1978. The assessee claimed depreciation and development rebate in relation to the 13 mills for the assessment years 1973-74 and 1974-75. The Income-tax Officer rejecter' the claim on the ground that the assessee had not become the owner in law. Both the Appellate Assistant Commissioner and the Appellate Tribunal upheld the order of the Income-tax Officer and the High Court, on a reference, held that the assessee had not become the legal owner of the 13 mills in 1972 and upheld the denial of depreciation and development rebate [see (1997) 228 ITR 399]. On appeal to the Supreme Court:

Held, affirming the decision of the High Court, that on the facts found, it was not possible to reach the conclusion that the assessee had acquired dominion over the mills in question.

Mysore Minerals Ltd. v. CIT (1999) 239 ITR 775 (SC) ref.

Tamil Nadu Civil Supplies Corporation Ltd. v. CIT (1997) 228 ITR 399 affirmed on this point.

A.K. Ganguli, Senior Advocate (V. Krishnamurhty, Advocate with him) for Appellant.

S. Ganesh, Kamalendra Misra, S.K. Dwivedi and Ms. Sushma Suri, Advocates for Respondent.

ORDER

The question for consideration in this appeal by the assessee against the judgment and order of a Division Bench of the High Court at Madras reads (see (1997) 228 ITR 399, 401) thus:

"Whether, on the facts and in the circumstances of the case, the petitioner is entitled to depreciation and/or development rebate as claimed in respect of the assessment years 1973-74 and 1974-75?"

The High Court answered the question in the negative and against the assessee: The authorities and the Tribunal had also taken the view that the assessee was not entitled w depreciation under section 32 of the Income Tax Act, 1961, for the two assessment years in question, namely, assessment years 1973-74 and 1974-75, the previous years whereof ended on March 31, 1973 and March 31, 1974, respectively.

Learned counsel on behalf of the assessee has placed great emphasis upon the decision of this Court in Mysore Minerals Ltd. v. CIT (1999) 239 ITR 775 which has interpreted the word "owned" in section 32 broadly. It did so in the following circumstances:

The assessee before it had purchased certain houses from the Housing Board and had made part payment thereof. It had acquired possession of the houses but the deed of conveyance was not executed until after the financial year in question. Even so, the assessee's claim for depreciation of the buildings, which it had used for the purpose of its business, was upheld on the basis that it had acquired dominion over the buildings.

We will assume the correctness of the judgment but, on the facts found, it is not possible to reach the conclusion that the assessee had acquired dominion over the mills in question. There is nothing on the record which indicates this nor is that the finding of the Tribunal.

In the circumstances, the appeal is dismissed with costs.

M.B.A./1030/FC ??????????????????????????????????????????????????????????????????????????????? Appeal dismissed.