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 asset, registration is not a condition precedent to establish legal ownership for purposes of depreciation under the Income-tax Act; beneficial/actual ownership and use in the assessee's business sufficed. Relying on ITAT precedent holding similarly for an unregistered motorcycle, the HC affirmed that depreciation is allowable if the assessee owned the vehicle though registration stood elsewhere. The question was answered against the Revenue and in favour of the assessee.

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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.

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