' SHAMEEM HUSSAIN KADRI, J.-This order will dispose of Tax References 226 and 185 of 1971 as well.
Tax Reference No 226 of 1972 relates to the Assessment Years 1962-63 and 1963-64, Tax Reference No, 185 of 1971 refers to the Assessm ent Year 1964-65 and Tax Reference No, 117 of 1971 concerns the Assessm ent Year 1965.66.
2. The assessee in these references is a transferee of an evacuee concern Dhanpatmal Jawala Dass Cotton Factory, Lyallpur, with a P. T.
0. In their favour. The A.
0. P. Consists of ten partners. The assessee claimed depreciation in respect of machinery under section 10(2)(vi) of the Income-tax Act. The Income tax Officer rejected the claim of the assessee on the ground that the property has not been permanently transferred and does not vest in them.
He passed the order for the Assessme nt Year 1962-63 on 30th June 1967 and for the Assessment Year 1963-64 on 30th June 1968. Two appeals were filed by the assessee before the Appellate Assistant Commissioner which were rejected by him as per consolidated order dated 2nd October 1968. The Tribunal accepted the appeal of the assesses, on 25th June 1969.
3. In Tax Reference No, 117 of 1971, the Income-tax Officer passed the order rejecting the claim on 16th June 1970. The appeal was accepted by the Appellate Assistant Commissioner on 15th December 1970 and the Tribunal dismissed the appeal of the Department on 7th May 1971.
4. In Tax Reference No, 185 of 1971 for the Assessment Year 1964.65 the claim was rejected by the Income-tax Officer by order which is not dated. However, the appeal of the assessee before the Appellate Assistant Commissioner failed on this point on 3rd June 1969. The second appeal of the assessee was accepted by the Income-tax Appellate Tribunal by order dated 29th December 1970.
5. The question for answer in these references is the same and is reproduced as under :- ' Whether on facts and in the circumstances of the case, the Tribunal was justified in directing that depreciation should be allowed to the respondent who held only a provisional transfer order during the year which did not confer proprietary rights on him?
' The transfer is dealt with by paragraph 37 of Chapter VII of Settlement Scheme No, I, sub-para. (ii) of which is reproduced as under :- "That pending the permanent transfer of the property to him the transferee shall not alienate the property in any manner but he may lease it out or mortgage it to any person subject to such conditions as may be laid down by the Chief Settlement ommissioner."
This clearly reflects that certain rights have been created in favour of the transferee when a provisional transfer is made in his favour, for instance, he can lease it out or mortagage it to any person of course subject to certain conditions prescribed by the Chief Settlement Commissioner.
6. Sheikh Abdul Hag learned counsel for the petitioner vehemently argued that the case of the assessee does not fall within the purview of section 10(2) (vi) of the Income-tax Act since the property does not belong to the assessee. We are afraid, we cannot agree with the submission made, for, the issuance of Provisional Transfer Order confers right on the assessee though subject to certain conditions. We asked the learned counsel as to whether the Mill has been taken away from the assessed by the Settlement Department to which he replied in the negative. We are of the considered view that the Tribunal was right in allowing the relief to the assessee. The Supreme Court has held in Rahim Bakhsh v. Ch. Ahmad Bakhsh and others (1) that certain rights do accrue to the transferee. The answer to the question is, therefore, in the affirmative. The applicant fails. The respondent shall be entitled to costs.
(1) PLD 1964 SC 189