Depreciation on operating-lease vehicles remains available where lease agreements retain ownership despite registration in users' names.

Ownership of vehicles under operating lease remained with the assessee where the master lease agreements retained the assessee's rights and interest and granted customers only a right to use the vehicles. Registration in users' names in vehicle registration records, undertaken for convenience under the motor-vehicle regime, did not displace that ownership. Applying the principle governing depreciation on leased assets, the notes state that the assessee was entitled to depreciation despite registration in the users' names, and the Revenue's challenge raised no substantial question of law.

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Issues: Whether the assessee, as owner of vehicles given on operating lease, was entitled to depreciation notwithstanding that the vehicles were registered in the names of the users.

Analysis: The master lease agreements established that ownership, rights and interest in the leased vehicles remained with the assessee, while customers received only a right to use them. Registration of the vehicles in the users' names in the R.C. books for convenience under the motor-vehicle regime did not displace the assessee's ownership. The governing principle in relation to depreciation on leased assets applied to these facts.

Conclusion: The assessee was entitled to depreciation on the vehicles given on operating lease; the Revenue's questions concerning that disallowance did not give rise to a substantial question of law.

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