Depreciation on operating-lease vehicles remains available to the lessor despite registration in users' names, subject to no duplicate claim.

A lessor may claim depreciation on vehicles provided under operating leases even where the vehicles are registered in the users' names. Registration under motor-vehicle law creates a deeming fiction limited to that law and does not displace the lessor's ownership for income-tax purposes. Where the vehicles are business assets used through operating leases, the requirements for depreciation are satisfied. The Assessing Officer may verify that the vehicle users have not also claimed depreciation, preventing a duplicate claim.

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Issues: Whether a lessor is entitled to depreciation on vehicles given on operating lease although the vehicles are registered in the names of the users.

Analysis: Registration of the vehicles in the lessees' names under the motor-vehicle law creates a deeming fiction only for that law and does not displace the lessor's ownership for income-tax purposes. The vehicles constituted business assets used by the lessor through operating leases, satisfying the requirements for depreciation. The Assessing Officer may, however, verify that depreciation has not also been claimed by the vehicle users.

Conclusion: The assessee, as lessor, is entitled to depreciation on the leased vehicles; the deletion of the disallowance is sustained.

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