Depreciation on operating-lease vehicles remains available to the lessor despite registration in lessees' names, subject to preventing double claims.

A lessor may claim depreciation on vehicles provided under an operating lease even where they are registered in the lessees' names and delivered directly to them. Vehicle registration creates deemed ownership only for Motor Vehicles Act purposes and does not displace the lessor's ownership for income-tax purposes. Where the lessor uses the vehicles in its leasing business, it satisfies the ownership and business-use conditions for depreciation. The claim remains subject to verification that the vehicle users have not also claimed depreciation, preventing double depreciation.

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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 lessees and directly delivered to them.

Analysis: Registration in the lessees' names under the Motor Vehicles Act creates a deemed ownership only for that enactment and does not displace the lessor's ownership for income-tax purposes. The lessor used the vehicles in its leasing business and consequently satisfied the ownership and business-use requirements for depreciation. The Assessing Officer may verify that depreciation has not also been claimed by the users of the vehicles.

Conclusion: The assessee, as lessor and owner of the leased vehicles, is entitled to depreciation, subject to verification that no double depreciation is allowed.

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