Ownership and business use control depreciation claims for a motor car despite registration in a director's name.

Depreciation on a motor car depends on the assessee's ownership and business use of the asset, and registration under the Motor Vehicles Act does not by itself negate ownership. Where the company paid the purchase consideration and used the vehicle for business, the fact that it stood in the director's name in the registration records could not justify disallowance. The same reasoning applied to interest on the loan taken to acquire the vehicle. The disallowances of depreciation and interest were therefore deleted.

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Issues: Whether depreciation on a motor car and interest on the loan taken for its purchase could be disallowed merely because the vehicle stood registered in the name of the director and not in the name of the assessee company.

Analysis: Depreciation turns on the assessee's ownership and use of the asset for business. Registration under the Motor Vehicles Act does not by itself determine or negate ownership of a motor vehicle, and non-recording of transfer in the registration records does not invalidate the underlying transfer. On the facts, the purchase consideration was paid by the company and the vehicle was used by it for business, so the mere fact that the vehicle stood in the director's name in the motor vehicle records could not defeat the claim. The same reasoning applied to the interest expenditure incurred on the loan taken for acquiring the vehicle.

Conclusion: The disallowances of depreciation and interest were not sustainable and were deleted.

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