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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether depreciation on motor cars is allowable where the cars were purchased with the assessee-company's funds and used for its business, though registered in the name of a director, and whether the disallowance could be enhanced to 100% on that ground.
Analysis: The assessee had acquired the cars out of its own funds, shown them in its balance sheet and gross block, and established that they were used for business purposes. The mere fact that the vehicles stood in the director's name and were not transferred in the company's name under the motor vehicle registration law did not negate the assessee's beneficial ownership. Registration under the Motor Vehicles Act is not an essential prerequisite for acquisition of ownership, and non-registration does not invalidate ownership where the asset is otherwise owned and used for business. On those facts, depreciation could not be denied. The Revenue also did not place any distinguishing material to justify enhancement of the disallowance.
Conclusion: Depreciation on the cars was admissible, and the enhancement of the disallowance to 100% was not sustainable. The issue was decided in favour of the assessee.
Ratio Decidendi: For depreciation, beneficial ownership and actual business use are material; registration in another person's name under the motor vehicle law does not by itself defeat the assessee's claim.
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