Depreciation Allowed to Deemed Owner u/s Section 53A

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The assessee company claimed depreciation on the flats , office buildings and cars which were on lease . The A.O disallowed the cliam of depreciation on those assets on the grounds that the the assessee is not the owner of the asset , as such it can not claim depreciation on those assets

The issue before , Delhi High Court in Indian Sugar & Gen. Industry Export Import vs CIT 19 taxman 42 was

Whether the depreciation allowable on leased assets?

The Delhi High Court held vide its order 30 January 2012 as under :

25. In ITA No.1166/2011 an additional question of law has been raised by the Revenue. The contention of the appellant-Revenue is that the assessee is not entitled to depreciation in respect of lease hold rights in office/flat, and car parking space etc. as the respondent/assessee was not the registered owner. We are not inclined to frame any question of law on the aforesaid question as this issue has to be decided against the Revenue and in favour of the respondent-assessee in view of the decision of the Supreme Court in Mysore Minerals Ltd. v. CIT [1999] 239 ITR 775 / 106 Taxman 166 .

26. It is not the contention of the Revenue that the respondent-assessee was not in possession of the property and had not acquired interest in the said property as per Section 53A of the Transfer of Property Act, 1882. Merely because the assessee did not have a registered sale deed cannot be a ground to deny depreciation under Section 32 of the Act, if other conditions are satisfied.