Depreciation on motor cars denied where business use was not proved before year-end

Depreciation under section 32 was denied because the taxpayer failed to prove that the motor cars were used for business during the relevant year. Although the cars were purchased on the last day of the accounting year, they were not registered for road use and no evidence showed actual business use before year-end. Since depreciation requires both ownership and user for business or profession, presumptive allowance was not justified. The question was answered in favour of the Revenue and against the assessee.

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Issues: Whether depreciation under section 32 of the Income-tax Act, 1961, is allowable in respect of motor cars purchased on the last day of the accounting year when there is no proof that they were used for the purposes of the assessee's business during that year.

Analysis: Depreciation is available only for assets owned by the assessee and used for the purposes of business or profession. The cars were purchased on the last day of the accounting year, had not been registered for use on the road, and no evidence was produced to show actual business use before the close of the year. In the absence of proof of use, presumptive reasoning could not justify allowance of depreciation.

Conclusion: Depreciation was not admissible. The question was answered in favour of the Revenue and against the assessee.

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