(Paras 1 to 7 not being relevant to main controversy have been omitted from being reproduced Ed.) assessee's previous year ended on 31st March. On 29th March 1974, i.e., 3 days prior to end of accounting year, assessee gifted 17 barges under revocable gift deed 2 barges to Gomantak (P) Ltd. and 15 barges to Chowgule Education Society. Gift-tax was paid on gift. assessee claimed depreciation amounting to Rs. 1,09,114 in respect of these barges. Even though ITO has not discussed this question in his assessment order, discussion on same obtains in IAC's direction under s. 144B of Act. Holding that one of conditions for allowance of depreciation is that assessee should be owner of asset and since on 31st March, 1974, last day of year, assessee was not owner of these barges, IAC directed that depreciation on this should not be granted. CIT (A), however, accepted assessee's claim for depreciation. According to him, while two conditions to be fulfilled for grant of depreciation are ownership of asset by assessee and its user for purpose of business, there is not condition that asset should be owned by assessee on last day of accounting year. It was undisputed that during period barges were used by assessee, never sold, discarded, demolished or destroyed burgers. According to CIT, therefore, assessee was entitled to depreciation under s . 32(1)(ii) r/w r. 5 of IT Rules, 1962 ('the rules'). This is challenged in departmental appeal. ld. Counsel for department has pointed out that s. 32 interpreted in light of s. 34 of Act has reference to ownership of asset throughout year. Reference was also made to r.5 and Appendix I of rules relating to rates of depreciation allowance. Sec. 34(2) prohibits grant of depreciation for previous year in respect of assets sold, discarded, demolished or destroyed in that year. In this sub- section no provision is made for gifts. 'Sold' does not include 'gifted'. According to ld. Counsel assessee-owner by assessee throughout previous year and not necessarily even to end of year. This is clear from scheme of Act appearing in sections like s. 34. ld. Counsel has referred to decision in Century Enka Ltd. vs. ITO 1976 CTR (Cal) 433: (1977) 107 ITR 123 (Cal), where expression 'capital employed' was interpreted giving concept of holding asset throughout year. Since assessee do not own asset throughout year, he is not entitled to any depreciation at all. For assessee ld. Counsel has pointed out that even if asset is owned by assessee for any time faring year, he should be entitled to deduction. Reference is made in this connection to provisions of s. 28 of Act and concept of assessment of business income where business carried on 'at any time faring year' is considered to be relevant. contention of department according to ld. Counsel, is not only against actual practice followed but is also against basic scheme of Act. In fact wherever Act. wanted to refer to period throughout year, care has been taken to indicate that in section itself; for instance, s. 2(18)(b)(B) where expression 'throughout relevant previous year' is used. Similar expression occurs in s. 79 of Act. Whenever condition is imposed, if it is substantially complied with, according to ld. Counsel, conditions should be regarded as satisfied. This is especially so in case of benefit conferred on assessee. In present case asset having been owned by assessee for major part of year, in fact except for last 3 days of year, assessee is entitled to depreciation on asset for entire year. There is not dispute about facts. assessee owned these assets consisting of 17 barges up to 28th March, 1974. previous year of assessee being year ended 31st March, 1974, asset, as claimed by ld. Counsel for assessee, was owned by assessee for year except for last 43 days. asset was gifted to two parties. gift would not come under scope 'sold, discarded demolished, or destroyed in year'. provisions of s. 34(2)(ii), to which reference was sought to be made during course of argument, do not apply to facts of case. question is whether fact of gifting or asset being not in ownership of assessee throughout year would be fatal to claim. relevant portions of s. 32 are: "(1) In respect of depreciation of buildings, machinery, plant for furniture owned by assessee and used for purposes of business or profession, following deductions shall, subject to provisions so s. 34, be allowed xxx xxx xxx (ii) in case of buildings, machinery, plant or furniture, other then ships covered by clause (i), such percentage on written down value thereof as may in any case or class of cases be prescribed: Provided that where actual cost of any machinery or plant does not exceed seven hundred and fifty rupees, actual cost thereof shall be allowed as deduction in respect of previous year in which such machinery or plant is first put to use by assessee for purposes of his business profession:" two main conditions to be satisfied for grant of depreciation are: 'the machinery, plant, etc. must be owned by assessee', and 'used for purposes of business or profession' section does not specify whether these two conditions, viz., ownership o f assessee and user for purpose of business should be satisfied throughout year or at beginning of year or end of year or at any particular part of year. section also does not provide whether periods for two conditions could be different or whether for same period both conditions should be satisfied. provisions of s. 32(1) are to be given effect to by resort to provisions of r. 5(1) and Part I of Appendix I. material part of r. 5(1) is as under: "Subject to provisions of sub-rr.(2) and (3), allowance under clause(i) or clause (ii) of sub-section (1) of s. 32 in respect of depreciation of buildings, machinery, plant or furniture or allowance under clause (i) of sub- section (1A) of section 32 in respect of depreciation of any structure or work referred to in that sub-section shall be calculated at all percentage, specified in second column of Table in Part I of Appendix I to these rules on actual cost or, as case may be, written down value of such of assets aforesaid as are used for purposes of business or profession of assessee at any time during previous year." (Emphasis, Italicised in print, supplied) rule provides that depreciation is to be calculated on actual cost or written down value of assets used for purposes of business or profession of assessee 'at any time during previous year' at rates at which depreciation is allowable. This is allowed as percentage of there actual cost or written down values, as case may be. italicized words in r. 5(1) indicates that even though s. 32(1) does not refer to any particular portion of previous year in which asset should be used for business or profession of assessee, depreciation at prescribed rate would be allowable if asset is used at any time during previous year. If therefore, asset is used even for one day in year by assessee, depreciation would be allowed. While section, therefore, prescribes that asset should be used for purposes of business of assessee without mentioning any time limit, rules made under Act specifically broadens or liberalises scope of deduction by prescribing that depreciation would be allowable if asset is used at any time during year, i.e., even for day or few hours. ambiguity, if at all, on 'the period of use' for purpose of claiming reduction for depreciation is thus, clearly removed by rule made under Act. With regard to ownership of asset, however, section provides that asset should be 'owned by assessee'. There is no rule not any other subordinate legislation which clarifies this particular condition laid down by section. Where legislature wanted to give assessee benefit of depreciation even if asset is used for day in year, rules clearly provided for it. This indicates clear warrens on part of legislature of controversy that could arise about period for which asset could be used. We cannot assume that this awareness as to period would be absent when it concerns ownership of asset, when, therefore, legislature has not taken trouble either or specify in section or in rules made under Act, that depreciation would be allowable even if asset if whatever be particular part of year it means that no concession or liberation with regard to this condition is intended. stand of ld. Counsel for Department, therefore, that assets should be owned by assessee throughout previous year seems to be correct. It is true that assessee may acquire asset, as claimed by ld. Counsel for assessee, sometime after beginning of precious year some TIOs have been truanting depreciation as matter of practice. But this would not set law if section or rules made thereunder do not authorise it. It is true that in other sections provisions with regard to period of previous year have been sometimes made but mere fact that some clauses contain such provision would not create ambiguity in other clauses when workings are clear and no such reasons are made. tax is levied on income of precious year. It covers entire previous year. income is computed also for entire previous year. Against this background when it is provided that asset should be owned by assessee without any concession as to length of period for which asset is owned, it clearly means that asset should be owned by assessee throughout period of previous year. There is no inequity if depreciation is not granted in case where asset is purchased by running business during course of year. assessee would entitled to depreciation in succeeding year and written down value in that succeeding year would be cost of asset thus, not putting assessee at any disadvantage for his not getting any depreciation for earlier year. Likewise, where asset is sold, discarded, etc., during year of sale assessee gets adjustment for any loss of value on account of such sale, etc., In our view, therefore, if specific condition is that asset should be owned by assessee throughout previous year in order to be entitled to depreciation, there is neither any inequity nor any harshness about it. decision of Calcutta High Court in Century Enka Ltd.'s case (supra) dealing with concept of capital on particular day of year for purposes of s. 80J of Act supports our view. In s. 15(c) of Act exemption was provided at specific percentage per annum 'on capital employed in undertaking'. Rule 19A of rules prescribing manner of computation of capital refereed to value of asset on 'first day' of computation period. Calcutta High Court held that to extent rule directed that value on first day of computation period should adopted as basis, rule was ultra vires. prescription of period in that case was against interest of assessee. prescription of period for use in business in r. 5(1) is in interest of assessee. This latter prescription therefore, being concession offered to assessee would be regarded as binding on department even if rules are legally ultra vires of Act. Where no such concession is granted enacting of rule prescribing time limit against assessee would certainly, on ration of Calcutta High Court decision, be held improper. Where rules do not, therefore, prescribe time limit, there is not reason for whittling down period for which asset is owned by assessee from 'full previous year' for which income of asset is computed and tax is levied for portion thereof. In this view of matter, assessee would not be entitled to depreciation if he owns asset at beginning of year or at end of year or at any time in between but not for full year. In present case, ITO had disallowed claim on last day of year. In our view, even if assessee had owned asset for 364 days out of 365 days but not for full year, he would not be entitled to depreciation on this asset. On this point, we therefore, hold that: (i) section requires that asset should be owned by assessee and used by him for hi business, (ii) while in respect of user, concession is granted by rules that user could be for any time in year, such concession is not granted in respect of ownership of asset, (iii) neither analogous provisions in other sections of Act nor any other judicial decisions support curtailing period of ownership, (iv) analogous decisions like those for s.80J clearly support ownership for whole year when no particular period is provided, (v) provision does not result in any inequity. We uphold ITO's order on this point and reverse CIT's decision. We uphold ITO's order on this point and reverse CIT's decision. appeal is party allowed. PER B. L. SHELAR, J. M. I have had pleasure of going through order written by ld. V. P. and I agree with him on other issues, except on point of depreciation, in that V. P. has held that assessee is not entitled t depreciation on barges that were gifted by assessee by gift deed dt. 29th March, 1974. assessee's previous year ended on 31st March, 1974 and on 29th March, 1974, that is, three days prior to end of accounting year, assessee gifted 17 barges under revocable gift-deed and gift-tax was paid by assessee. valuation adopted of barges has not been challenged by department. Therefore, it can be held that assessee showed correct market value of 17 barges. assessee claimed depreciation amounting to Rs. 1,09,114 in respect of these barges. It is pertinent to note that ITO did not elaborate point as to why he rejected claim of assessee, but he relied evidently on directions given by IAC under s. 144B. However, claim of assessee was accepted by CIT (A) ad department came in appeal before Tribunal inter alia, on other grounds. according to ld. departmental representative, assessee was not owner of barges for entire year. To be precise, assessee was not owner of barges from first day of accounting year to last day of accounting year and according to ld. departmental representative, asset has to be owned 'throughout year' so as to enable assessee to claim depreciation under s. 32 r/w r.5. ld. departmental representative had referred to decision of Calcutta High Court in Century Enka Ltd.'s case (supra) and, according to him, we can take guidance from said judgment, though it was claim under s. 80J and issues was regarding capital employed. departmental representative insisted that in order to get benefit of depreciation, assessee must be owner of asset for entire year and that asset should be used by him for purpose of this business. version of ld. representative of assessee was that s. 32 r/w r. 5 definitely helps case of assessee as words in r. 5 are 'at any time furing previous year'. According to Shri Inamdar, s. 34 has no application in present case. He also mentioned fact that department is accepting claim of assessee where assessee is owner of asset for part of year and asset is used for business of assessee. According to him, there is not justification not follow same. Two things are undisputed, one that barges were owned by assessee for whole year except three days when gift was made by assessee and two, that assets, namely barges, were used by assessee for its baseness. There is no controversy over these facts. Since .s 32 is already reproduced in earlier part of order, it is not reproduced here. Now, whether interpretation given by ld. departmental representative is acceptable and to my mind, it is not subsequences s. 32 does not specifically say that buildings or machinery or plant or furniture should be owned by assessee 'throughout year', i.e., from first day to last day of previous year. When section itself does not speak of such words, it is not advisable to substitute some words on our own so as to limit benefit to be given to assessee. It is pertinent to note that r. 5, which has been reproduced by ld. V. P. in his order, specifically says '..........at any time during previous year'. If intention of legislature was to hold that asset should be owned by assessee from first day to last day of previous year, then there was no necessity or justification to use these words 'at any time' in rule and, therefore I am of view that interpretation suggested by ld. departmental representative that asset should be owned 'throughout year' does not appeal to me. Therefore, I uphold order of CIT (A) who has allowed depreciation on barges. case of assessee is not covered under s. 34, as it was gift and not sale. Sec. 34(2) (ii) speaks of building. machinery, plant or furniture sold, discarded, demolished or destroyed in that year. None of these is applicable to present case, as assessee had gifted barges to donee. It was pointed out by Shri Inamdar that department is adopting practice that if assessee has owned asset for part of previous year and asset is used for business, then assessee is entitled to depreciation. In this regard, I would like to rely on judgment of Supreme Court in CIT vs. Balakrishna Malhotra (1971) 81 ITR 759 (SC). Supreme Court has held: (p.762): "..........Interpretation of provision in taxing stature rendered years back and accepted and acted upon by department should not be easily departed from. It may be that another view of law is possible put law is not mere mental exercise. Courts while reconsidering decisions rendered long time back particularly under taxing statutes cannot ignore harm that is likely to happen by unsettling law that had been once settle..............." To my mind, observations of Supreme Court are aptly applicable to present case. departmental appeal on this point will have to be dismissed. per T. D. Sugla, President (Third Member) There was difference of opinion between ld. Members who heard appeal originally. point of difference has been stated as under: "Whether, on facts and in circumstances of case assessee would be entitled to depreciation on asset even though it owned it only for part of and not full previous year?" case has come up before me for disposal as Third Member. Briefly stated, relevant facts are that assessee is company and proceedings relate to its assessment for asst. yr. 1974-75 for which previous year is financial year, i.e., from 1st April, 1973 to 31st March, 1974. During previous year, assessee gifted 17 barges which it owned on 28th March, 1974, to two institutions. Thus, assessee owned barges for 362 days of previous year as barges were gifted three days before end of previous year. Though not very martial for purpose of this appeal, it may be stated for sake of completeness, that gifts made were revocable gifts. ITO completed assessment under s. 143(3) r/w s. 144B of Act. He has disallowed depreciation on written down value of abovesaid 17 barges on ground that assessee did not own these barges on last date of previous years. CIT (Appeals) has considered this issues in paragraphs 11 and 12 of his order. Observing that it is not said anywhere in s. 32(1) that asset should be owned by assessee on last date of accounting year, he held that assessee was entitled to depreciation on barges even though same were gifted away on 28th March, 1974. He also held that s. 34(2)(ii) did not cover assessee's case and depreciation cannot also be disallowed on that ground. Accordingly, he had held that assessee is entitled to depreciation in respect of barges claimed. ld. members who have heard appeal originally, have differed on issue as stated earlier. ld. Vice President has considered this issues in paragraphs 1 to 14 of his order. ld. Judicial Member's order which runs into eight paragraphs in entirety deals with this issue. Shri K. A. Sathe, departmental representative, has kly relied on order of ld. Vice president in support of his contention that assessee is not entitled to depreciation on abovesaid 17 barges. Family admitting that provisions of s. 34(2)(ii) are not applicable in this case, Shri Sathe submitted that there are three conditions laid down for allowance of depreciation, namely: (i) prescribed particulars should be filled, (ii) assessee must own asset, and (iii) assessee must use it for purpose of its business or profession. It is submitted that though s. 43(1) is silent as to when and for how long asset would be owned by assessee and used for purpose of business or profession as such, it is evident from scheme, of Act that asset on which depreciation has to be allowed should be owned by assessee and used in business or profession throughout previous year, i.e., on each day of previous year. In this context, Shri Sathe has invited our attention to r. 5 to show that as regards use of such asset for t h e purpose of business or profession throughout previous year, legislature has given concession as result of which, depreciation will be allowed to assessee even though particular asset was not used for purpose of business or profession throughout previous year. Absence of similar rule as regards ownership, he contended, means that condition that asset must be owned by assessee throughout previous year remains as such and must be fulfilled by assessee before he qualifies for depreciation. According to departmental representative, indirect support for view he was propounding can be derived from decision of Calcutta High Court in case of Century Enka Ltd. (supra) where their Lordships have declared r. 19A ultra vires to extent they provided for computation of capital as on first date of previous year without taking into account average amount increase or decrease in assets and liabilities during previous year. ratio of decision is that use of capital throughout previous year is important factor. Though s. 34(2)(ii) is not applicable as such, Shri Sathe submitted that fact that depreciation is not allowable in year in which assets are discarded, demolished, sold, etc.. is indicative of legislature's intention that assessee must own asset throughout previous year for its qualifying for allowance of depreciation. Lastly, my attention is invited to decision of Supreme Court in case of Sri Ramamohan Motor Service vs. CIT (1973) 89 ITR 274 (SC) for proposition that person who claims benefit under section must strictly comply with requirements of that section. Substantial compliance will not be enough . Shri S. N. Inamdar, ld. counsel for assessee, on other had, kly relied on order of ld. Judicial Member. He contended that it was not quite correct to say that opening part of s. 32 indicated that asset on which depreciation is to be allowed must be owned by assessee and used for purpose of business or profession throughout previous year. According to him, section is silent on face of it but other clauses under said sub-section and definition of expression 'written down value' in s. 43(6) of Act clearly indicate that assessee would be entitled to depreciation even if it owned asset for port of previous year. In this connection, Shri Inamdar took me through provisions of s. 32(1)(iia)(iii) to who that there was intrinsic evidence indicating legislature's intention to contrary. Sec. 43(6), according to counsel, provides that 'written down value' means in case of assets acquired in previous year, actual cost to assessee. It is stated that wherever legislature intended that situation should prevail throughout previous year to at any time during previous year or on any particular date, it has said so specifically and not left it to speculation. In this context, counsel invited my attention to provisions of s. 2(18)(b)(A), 2(18)(b)(B)(i)m Explanation 2 to s. 64, s. 79(a), s. 104(2)(iii), Explanation to s. 40A(2) and s. 28 of Act itself. According to ld. counsel absence of any such specific expression in s. 32(1) means and can only mean that assessee will be entitled to depreciation even if it owns asset at any time during previous year subject, of course, to other conditions. decision of Calcutta High Court in case of Century Enka Ltd. (supra), it was pointed out, supported claim of assessee rather than that of department. For this purpose, counsel relied upon observations of Calcutta High Court at pp. 131-132 in that case where it has been observed that when particular legislative enactment has received authoritative interpretation whether by judicial decision or by long course of practice, it is reasonable to hold that interpretation or that practice is correct interpretation of provision. It cannot, perhaps, be disputed that department has been allowing depreciation right from 1922 or even earlier on assets which were owned and/or used by assessee for part of year. Lastly, counsel has invited my attention to decision of Patna High Court in case of CIT vs. S. K. Sahama & Sons (1946) 14 ITR 106 (Pat) where this question, it is stated, has been directly considered in favour of assessee. In reply, Shri Sathe submits that he is not asking for addition of some word in s. 32(1) and department's case is based on pure and simple interpretation of provisions of s. 32(1). Specific mention of such expression as 'throughout previous year', 'at any time during previous year', 'on any particular date or any part of previous year' in various sections referred to by counsel, according to Shri Sathe, does not improve assessee's case inasmuch as that has been done by way of abundant precaution and/or to ensure that taxpayer does not escape. decision of Patna High Court in case of S. K. Sahana & Sons (supra) is stated to be distinguishable inasmuch as decision in that case has been that there is not scope for apportionment of depreciation proportionately with reference to period of ownership in previous year. That is why department has denied assessee's claim for depreciation altogether in this case and has not allowed it proportionately. Having heard parties and after going through decisions relied upon and relevant provisions of Act, I am of view that assessee is entitled to succeeded in its claim for depreciation. Sec. 32(1), which provides for depreciation on various assets, does not certainly lay down that asset should be owned by assessee throughout previous year. On contrary, provisions like ss. 32(1)(iia), 32(1)(iii) and 43(6) contemplate allowance of depreciation in cases of assets acquired during previous year which would mean that assessee owned assets not throughout previous year, but only for part of previous year. That apart, r. 5, which provides for allowance of depreciation in even of assessee using asset for some time in previous year only to my mind is indicative of legislature's intention. Except in few exceptional cases, generally, period of ownership of assert and period of ownership of asset and period of its use in business or profession will coincide. Rule 5, admittedly, provides for allowance of depreciation even when asset is used for purpose of business or profession for part of previous year. To say that in spite of this rule depreciation will not be allowed to assessee because it was not owner of asset throughout previous year is, to my mind, too technical view which is not justified. That apart, use of expression, such as, 'throughout previous year'. 1at any time furing previous year', 1on particular date', etc., in difference sections referred to by assessee's counsel indicates that legislature, whenever it wanted to be particular about particular situation, it has taken care to introduce that expression in section. Again, decision of Patna High Court in S. K. Sahana & Sons' case (supra), though old, according to my understanding support assessee's contention. It is true that it has been held in Patna High Court's decision that there is not scope for apportionment of depreciation pro rata when period of ownership of t h e assessee over asset continues decision which fully supports assessee's proposition. For this and other reasons given by ld. Judicial Member, with which I agree, I hold that assessee is entitled to depreciation under s. 32(1) on aforesaid 17 barges which were gifted by assessee on 28th March, 1974 to two institutions. Before concluding, it may be desirable to make clear that provisions of s. 34(2)(ii) are, admittedly not applicable in this case and provisions of s. 32(2)(iii), on other and, indirectly support assessee's claim. question that one should ask himself before deciding issue is whether assessee owned particular asset in previous year. answer to this question cannot, certainly, be in negative. This has to be seen particularly with reference to s. 28(i) which provides for computation of income under head "profit and gains of business or profession" if business or profession was carried on by assessee at any time during previous year. expression at any time furing previous year' which is used in s. 28, under scheme of Act, as I understand, would govern all sections which provide for computation of income under s. 28 after giving various allowances and/or deductions. My order will now go to Bench for deciding appeal according to majority view. *** FIRST INCOME TAX OFFICER v. CHOWGULE & CO. (P.) LTD.