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Issues: (i) Whether depreciation on trucks could be allowed to the assessee though the vehicles continued to stand in the husband's name. (ii) Whether, in a case selected for limited scrutiny, the Assessing Officer could examine and add a new issue without a separate notice, and what the effect of such objection would be.
Issue (i): Whether depreciation on trucks could be allowed to the assessee though the vehicles continued to stand in the husband's name.
Analysis: Depreciation under section 32 is available to the person who has dominion over the asset and uses it for business purposes. Registration under the Motor Vehicles Act is not conclusive of ownership where the assessee has acquired possession, borne the financial burden, used the vehicles for earning income, and disclosed such income in the return. The wider concept of ownership for depreciation purposes permits allowance even in the absence of formal transfer of registration.
Conclusion: The claim of depreciation was rightly allowed in favour of the assessee.
Issue (ii): Whether, in a case selected for limited scrutiny, the Assessing Officer could examine and add a new issue without a separate notice, and what the effect of such objection would be.
Analysis: The controversy raised a legal question going to the root of the assessment. A new issue introduced in a limited scrutiny assessment required examination of the CBDT instructions governing separate notice for additional issues. Since the point had not been examined by the lower authority and further factual and legal consideration was required, the proper course was to send the matter back for adjudication by the appellate authority.
Conclusion: The issue was remanded for fresh decision and the assessee obtained only statistical relief on this ground.
Final Conclusion: The depreciation issue was decided in favour of the assessee, while the limited scrutiny objection was restored for fresh adjudication, resulting in a partial substantive relief and a partial statistical disposal.
Ratio Decidendi: For depreciation, beneficial ownership and user of the asset for business are sufficient even without formal registration; for limited scrutiny, a new issue cannot be mechanically expanded without compliance with the prescribed notice procedure, and such a jurisdictional objection may require remand for proper adjudication.
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