Depreciation on non-owned assets cannot reduce taxable income where the assessee is not the owner of the buses.

Depreciation under the income-tax provisions is allowable only in respect of assets owned by the assessee. Where buses were found to be owned by individual members and not by the assessee, their depreciation could not be taken into account in estimating the assessee's net taxable income. The assessable income therefore could not be reduced by depreciation on assets not owned by the assessee, and the issue was answered against the assessee.

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Issues: Whether depreciation suffered by buses could be taken into account in estimating the assessee's net taxable income when the buses were not owned by the assessee.

Analysis: Depreciation under the relevant income-tax provisions is allowable only in respect of machinery or assets that are the property of, or owned by, the assessee. The Tribunal had found that the buses were owned by individual members and not by the assessee. In that situation, depreciation could not be allowed in the assessee's hands, and it was not permissible to reduce the assessable income by taking into account depreciation suffered by assets not owned by the assessee.

Conclusion: The question was answered in the negative, against the assessee and in favour of the Revenue.

Ratio Decidendi: Depreciation allowance is admissible only where the assessee is the owner of the relevant asset; if the asset is not owned by the assessee, its depreciation cannot be considered in computing the assessee's taxable income.

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