Purchaser using truck after paying consideration entitled to depreciation under Section 32 despite registration remaining in vendor's name

HC held that a purchaser who paid valuable consideration and used a truck in his business is entitled to depreciation under section 32, despite the vehicle remaining registered in the vendor's name. The court found the Motor Vehicles Act provision merely requires reporting of transfer and does not govern or invalidate ownership transfers; failure to record transfer only attracts penalty, not denial of ownership rights. The decision was answered in favor of the assessee and against the revenue.

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Issues Involved:
1. Whether the Appellate Tribunal was correct in upholding the order of the Appellate Assistant Commissioner allowing depreciation on the truck which was registered in the name of another person.
2. Whether the depreciation was admissible u/s 32 of the Income-tax Act, 1961, to the beneficial owner of the truck and whether the decision of the Tribunal was in accordance with the provisions of law.

Summary:

Issue 1: Depreciation on Truck Registered in Another Person's Name
The assessee purchased a truck from a vendor who did not have sufficient funds and thus registered the truck in his own name due to restrictions under the Motor Vehicles Act. The assessee financed the purchase, operated the truck, and paid all related expenses. The Income-tax Officer disallowed the depreciation claim because the truck was not registered in the assessee's name. However, the Appellate Assistant Commissioner allowed the depreciation, recognizing the assessee as the beneficial owner. The Tribunal upheld this decision, leading to the Revenue's appeal.

Issue 2: Admissibility of Depreciation u/s 32
Section 32 of the Income-tax Act allows depreciation on assets "owned by the assessee" and "used" for business purposes. The court noted that ownership under this section does not require registration under the Motor Vehicles Act. Citing various precedents, including R. B. Jodha Mal Kuthiala v. CIT and CIT v. Alpana Talkies, the court emphasized that beneficial ownership and the ability to exercise ownership rights are sufficient for claiming depreciation. The court also referenced decisions from the Allahabad, Calcutta, and Kerala High Courts, which supported the view that registration is not essential for ownership under the Income-tax Act.

Conclusion:
The court concluded that the assessee, having purchased the truck for valuable consideration and used it for business, is entitled to depreciation despite the truck being registered in the vendor's name. Both questions were answered in the affirmative, favoring the assessee and against the Revenue. No order as to costs was made.

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