2002 (5) TMI 27 - HC - Income Tax

Depreciation claim for business vehicle not registered in taxpayer's name upheld, based on beneficial ownership and actual use

Depreciation on a motor vehicle was in issue where the vehicle was not registered in the assessee's name. The HC held that, as a vehicle is a movable ... Depreciation on a vehicle - Whether, the Income-tax Appellate Tribunal was correct in law in holding that depreciation on a vehicle which is not registered in the name of the assessee was an allowable deduction in the hands of the assessee? - HELD THAT:- Tribunal on an appeal made to it allowed the claim of the assessee in the following terms: '6. Identical cases came up before the Delhi Income-tax Appellate Tribunal in the case of Indure Malleable and Alloy Casting Pvt. Ltd. [1989 (9) TMI 157 - ITAT DELHI-A]. In that case the assessee claimed depreciation on motorcycle which was not registered in the name of the assessee. The Tribunal vide its order dated July 7, 1980, granted depreciation in the light of the order of the Bombay Bench of the Tribunal in the case of SBC Pvt. Ltd.. Since vehicle in question is a movable asset, the Tribunal held that registration as required in the case of transfer of immovable property is not a condition precedent for legal ownership. Respectfully following the above decisions, we hold that the assessee is entitled to depreciation on the car which was owned by it but not registered in its name.' We are of the opinion that the question must be answered in the affirmative, i.e., against the Revenue and in favour of the assessee. Issues: Whether depreciation on a vehicle not registered in the name of the assessee is an allowable deduction under the Income-tax Act, 1961.Analysis: The question was considered with reference to the factual matrix showing purchase and use of the car by the assessee and earlier tribunal and judicial decisions dealing with depreciation claimed on vehicles not registered in the assessee's name. The matter was examined in the light of precedents addressing whether registration is a condition precedent to recognition of ownership for tax depreciation purposes and whether the Tribunal's findings were referable questions of law or findings of fact.Conclusion: Depreciation on a vehicle owned and used by the assessee is allowable even though the vehicle is not registered in the assessee's name; the question is answered against the Revenue and in favour of the assessee.