Leased vehicle depreciation turns on beneficial ownership and business use, while interest and sale-profit relief depend on correct computation and facts.

Depreciation on leased vehicles was treated as allowable where the assessee purchased the vehicles, retained dominion and beneficial control, bore registration and insurance costs, and used the vehicles for its business; motor vehicle registration in the lessee's name was not ative for income-tax ownership. Interest under sections 234B and 234C was considered mandatory, but required fresh computation on the correct assessment basis. Relief granted on profit from sale of vehicles was upheld because no material displaced the appellate factual finding. The governing test for depreciation was ownership-like control coupled with business user, rather than formal transport registration.

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Issues: (i) whether depreciation on leased vehicles was allowable to the assessee under section 32 on the footing that the assessee remained the owner and used the vehicles for its business; (ii) whether interest under sections 234B and 234C was leviable with consequential recomputation; and (iii) whether the relief allowed by the appellate authority in respect of profit on sale of vehicles was sustainable.

Issue (i): whether depreciation on leased vehicles was allowable to the assessee under section 32 on the footing that the assessee remained the owner and used the vehicles for its business.

Analysis: The lease arrangements were found to be real and acted upon. The assessee purchased the vehicles, bore registration and insurance costs, retained contractual rights to repossess the vehicles, restricted transfer, and controlled the vehicles during the lease period. The lessees were only permitted to use the vehicles for a temporary period. Registration in the lessee's name under the motor vehicle law was held not decisive for income-tax ownership. Applying the test of dominion and beneficial control, the assessee was held to satisfy both ownership and user requirements for depreciation.

Conclusion: Depreciation on the leased vehicles was allowable and the disallowance was deleted, in favour of the assessee.

Issue (ii): whether interest under sections 234B and 234C was leviable with consequential recomputation.

Analysis: The levy of interest was treated as mandatory, but the computation had to be made afresh by the Assessing Officer on the correct basis after giving consequential effect to the assessment result.

Conclusion: The levy was sustained, subject to fresh computation by the Assessing Officer, against the assessee.

Issue (iii): whether the relief allowed by the appellate authority in respect of profit on sale of vehicles was sustainable.

Analysis: No contrary material was shown to displace the appellate authority's factual relief, and its powers were co-terminous with those of the Assessing Officer.

Conclusion: The relief on profit from sale of vehicles was upheld, in favour of the assessee.

Final Conclusion: The assessee succeeded on the principal depreciation issue and on the revenue's challenge to the relief on sale proceeds, while the interest levy was maintained with consequential recomputation; the matter was thus only partly decided in the assessee's favour.

Ratio Decidendi: For depreciation under section 32, the relevant test is whether the assessee has ownership-like dominion and uses the asset in its business, and not merely whether legal title is reflected in transport registration records.

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