Depreciation on trucks not registered in assessee's name upheld; ad hoc personal-use disallowance rejected in tax appeal

Depreciation was allowed for trucks recorded in the partner's name because the firm paid purchase consideration, used the assets in its business and included them in its balance sheet; the tribunal applied the Mysore Minerals principle that 'owned' for depreciation includes beneficial ownership, and upheld allowance. The assessing officer's one-third adhoc disallowance for alleged personal use of a home theatre and car was rejected because it rested on presumption and surmise; the tribunal sustained the appellate deletion of those additions.

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Issues: (i) Whether the Tribunal should sustain deletion of addition of depreciation claimed on trucks where vehicles were registered in the name of a partner but reflected in the firm's block of assets; (ii) Whether the Tribunal should direct following of a Coordinate Bench decision relied upon by the revenue; (iii) Whether the Tribunal should sustain deletion of adhoc 1/3rd disallowance of depreciation on home theatre and motor car on presumed personal usage.

Issue (i): Deletion of addition of depreciation on trucks registered in partner's name but claimed by the firm.

Analysis: The legal question concerns who is entitled to depreciation under Section 32(1) where registration is not in the firm's name. The Tribunal examined whether the firm had invested in, used and borne financing and purchase consideration for the vehicles and whether the trucks formed part of the firm's balance sheet and block of assets. Reliance was placed on the principle that ownership for depreciation purposes may be wider than legal registration, including beneficial ownership where the firm has borne the cost and uses the asset.

Conclusion: In favour of Assessee. The deletion of the depreciation disallowance on trucks is upheld.

Issue (ii): Whether a Coordinate Bench decision relied upon by the revenue must be followed.

Analysis: The Tribunal considered whether the relied-upon Coordinate Bench authority remained binding and whether subsequent Coordinate Bench decisions had overruled it. The Tribunal applied the controlling judicial principle and examined subsequent decisions bearing on the same point.

Conclusion: The Tribunal did not follow the relied-upon earlier Coordinate Bench decision and dismissed the grievance based on intervening authority and applicable precedent favourable to the assessee.

Issue (iii): Deletion of adhoc 1/3rd disallowance on home theatre and motor car for presumed personal use.

Analysis: The Tribunal reviewed whether the assessing officer produced evidence to show personal use and whether an adhoc addition based on presumption was permissible. The Tribunal applied the standard that additions cannot rest on mere surmise or adhoc assumptions absent material indicating personal use.

Conclusion: In favour of Assessee. The adhoc 1/3rd disallowance is deleted.

Final Conclusion: The appeal by the Revenue is dismissed; the Tribunal upholds the deletion of the disputed depreciation additions and the adhoc disallowance, applying the wider concept of ownership for depreciation and requiring concrete evidence for personal-use disallowances.

Ratio Decidendi: For depreciation under Section 32(1), entitled claimant is one who has invested in and utilises the capital asset (beneficial ownership) notwithstanding registration not being in the claimant's name; additions for personal use require material evidence and cannot be made on mere ad hoc presumptions.

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