Tribunal allows company's depreciation claim on director's car despite registration details

The Tribunal allowed the appeal, overturning the disallowance of depreciation claimed by the company on a motor car registered in the director's name. Despite registration details, the Tribunal deemed the company as the de facto owner due to financial involvement and business use, allowing the depreciation claim of Rs. 2,55,051 and deleting the disallowance.

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Issues Involved:
1. Disallowance of depreciation on a motor car registered in the name of the director but claimed by the company.

Issue-wise Detailed Analysis:

1. Disallowance of Depreciation on Motor Car:

Facts of the Case:
The assessee company, a trader and commission agent in oleo chemicals, filed its return of income for AY 2012-13, declaring a total income of Rs. 1,19,78,233/-. During scrutiny assessment, it was observed that the assessee claimed depreciation of Rs. 5,10,103/- on a Mercedes Benz car registered in the name of the director. The A.O disallowed the depreciation claim, reasoning that the car was not registered in the company's name.

Assessee's Argument:
The assessee argued that the motor car was "really" owned by the company since the purchase cost was borne by the company, the car was reflected in the company's balance sheet, and the running expenses were met by the company. The assessee relied on the Supreme Court judgment in CIT Vs. Mysore Minerals (1999) 156 CTR 1 (SC) to support its claim.

CIT(A) Decision:
The CIT(A) upheld the A.O's decision, stating that the company was not the legal owner of the motor car and thus not entitled to depreciation. However, the CIT(A) adjusted the disallowance to Rs. 2,55,051/-, acknowledging that the car was used for less than 180 days during the year.

Tribunal's Analysis:
The Tribunal considered the following key points:
- Payments for the car were made by the company.
- The car was listed as an asset in the company's balance sheet.
- Day-to-day running expenses were borne by the company.

The Tribunal referred to several precedents:
- ITAT Ahmedabad in ITO Vs. Electro Ferro Alloys Ltd. (2012) 13 ITR (Trib) 594 (Ahd) held that a company could claim depreciation if the car was purchased in the director's name but used for business and reflected in the company's books.
- Edwise Consultants Pvt. Ltd. Vs. CIT (2015) 44 ITR (Trib) 0236 (Mumbai) where it was ruled that registration in the director's name does not preclude depreciation claims if the vehicle is used for business purposes and shown as a company asset.

Conclusion:
The Tribunal concluded that the assessee company was the de facto owner of the motor car, despite it being registered in the director's name. This conclusion was drawn based on the company's financial involvement and usage of the car for business purposes. The Tribunal set aside the CIT(A)'s order and allowed the depreciation claim of Rs. 2,55,051/-.

Final Order:
The appeal of the assessee was allowed, and the disallowance of depreciation was deleted.

Pronouncement:
The order was pronounced in the open court on 25.09.2017.

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