Ownership for depreciation u/s 32 upheld despite unregistered truck transfer, but enhanced 40% rate not retrospective

HC held that property in the trucks had passed to the assessee upon purchase, notwithstanding installment-based payment and non-registration of transfer under the Motor Vehicles Act. Relying on settled law, HC ruled that depreciation could not be denied merely because the vehicle continued to stand in the seller's name in the records of the registering authority. However, HC further held that the amendment enhancing depreciation on such vehicles to 40% with effect from 24 July 1980 was not retrospective. For AY 1980-81, only the pre-amendment rate of 30% applied. The Tribunal's grant of 40% depreciation was set aside, favouring Revenue.

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Issues Involved:
1. Entitlement to depreciation on trucks not registered in the assessee's name.
2. Entitlement to depreciation at 40% for a specific truck purchased during the year.

For the first issue, the court determined that property in the trucks had passed to the assessee upon purchase, even though full payment was not made upfront but in instalments. The court cited a previous judgment to support the assessee's right to claim depreciation despite non-registration of the vehicles in their name. Therefore, the court answered the first question affirmatively in favor of the assessee.

Regarding the second issue, the court clarified that the law applicable for depreciation is that which was in force on the 1st day of April of the relevant financial year. As the higher rate of depreciation came into effect after this date, it could not be applied to the assessment year in question. The court emphasized that rules regarding depreciation are substantive laws, not procedural, and should be determined based on the law at the beginning of the assessment year. The court rejected the argument for retrospective application of the amendment and upheld the principle that the benefit of doubt should only apply in cases of genuine interpretation uncertainty. Consequently, the court answered the second question negatively, in favor of the Revenue.

In conclusion, the court ruled in favor of the assessee for the first issue, affirming their entitlement to depreciation on the trucks. However, for the second issue, the court sided with the Revenue, determining that the assessee was only entitled to depreciation at the rate of 30%, not 40%. No costs were awarded in this judgment.

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