TaxTMI 
TaxTMI 
2005 (2) TMI 83
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.... as soon as the vehicles were leased out, the vehicles are used for the purpose of the assessee's business. He referred to various terms of the agreement and pointed out that the vehicle, which was purchased on August 4, 1986, was intended to be taken delivery of by the lessee at his own risk from the supplier and the registration was also his responsibility. Notwithstanding anything contrary thereto, the lease was supposed to commence from September 1, 1986, without any allowance in the rent in the case of default or infraction in the process of receipt of delivery and registration. He went a step ahead and contended that even if the vehicle was not leased out, the moment the assessee purchased the vehicle for the purpose of leasing out, it would amount to use of the vehicle for the purpose of his business. He contended that even a stand-by generator was held to be a use for the purpose of the business. He also contends that a trial run of a plant would also amount to use of the plant for the purpose of the business even though actual business may not commence. He also contends that even though the plant does not operate during the period of the previous year when the factory w....
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....echnical sense. The word "use" in Longman Dictionary of Contemporary English, 1982 reprint has been defined as "the act of using or state of being used; the ability or right to use something; the purpose or reason for using something; usefulness or advantage given by something; take advantage of; to employ; to put to use". In the Shorter Oxford English Dictionary, 3rd edition, 1987 reprint, the word 'use' has been given the meaning as "act of using or fact of being used; act of using a thing for any (esp. a profitable) purpose; the fact, state, or condition of being so used; utilization or employment for or with some aim or purpose; application or conversion to some (esp. good or useful) end; the act or fact of using, holding, or possessing land or other property so as to derive revenue, profit, or other benefit from it; a trust or confidence reposed in a person for the holding of the property, etc., of which another receives or is entitled to the profits or benefits; to follow (a trade, etc.); to employ (an article etc.), esp. for a profitable end; to treat or deal with (a person or thing)." The above dictionary meaning clearly indicates that the word "use" means the employm....
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....ent of registration does not confer title. The title is acquired by purchase. The registration is only a system of recording the ownership. Unlike immovable property, the acquisition of title is not dependent on the registration of movable property, if after such acquisition of ownership, the property is leased out, even though registered at a subsequent date, which is only a piece of evidence of the event of acquisition of the property by the person, that would not prevent the property being leased out. In a business of leasing the moment the property is leased out, whether the lessee is capable of taking advantage of the article or thing or putting the same to his use is immaterial for the purpose of construing the effect of use by the owner leasing out the same. The event of use of the property by the owner commences on the leasing out of the property. Whether the lessee is able to put the same to his use or not is not a relevant factor for construing the word "use" of the article or thing in relation to the lessor. The question was dealt with in relation to section 32 in various cases since cited by Mr. Khaitan. The view, we have taken, finds support from the ratio decided i....
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....he period of lease because of the lock-out in the lessee's factories. This was a happening, which was incidental to the assessee's business of leasing out generating sets. The assessee itself was not actually running the generating sets. The assessee's business was leasing out of the generators. The generating set was used by the assessee and was being used by the assessee in its business of leasing out generating sets. In CIT v. Geo Tech Construction Corporation [2000] 244 ITR 452 (Ker), it was held that there was no requirement that the asset should be used for the whole of the assessment year in question. The two ingredients for depreciation allowance are that the asset is owned by the assessee and that it is used for the purpose of the assessee's business or profession. The word "used" for the purpose of business may have a larger or narrower interpretation. If the expression "used" was construed strictly, it could be taken as connoting or requiring the active employment or actual working of the machinery, plant and building in the business. On the other hand, the wider meaning would include not only cases where the plant and machinery were actively employed but also cases w....
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....usiness. Whether the vehicle was used for the purpose of business: Therefore, it is to be ascertained when the vehicle was used for the purpose of the business. Whether entering into the agreement for lease by an assessee carrying on business of leasing amounts to use of the vehicle for the purpose of his leasing business which is required to be examined. From the agreement, it appears that it was executed on September 1, 1986. Admittedly, the vehicle was purchased on August 4, 1986. Therefore, ownership of the vehicle remained with the assessee and, as such, when the agreement was entered into, it could be said that the assessee was the owner of the vehicle, which is a tangible asset used for the purpose of leasing of business carried on by the assessee. The date of registration of the vehicle in the name of the assessee was effected on September 6, 1986. But the terms of the agreement contained that the vehicle would be taken delivery of by the lessee from the supplier at his risk and the lessor would not bear any responsibility for any damage prior to or during delivery. The lessee was also responsible for arranging transportation of the vehicle from the place of the manuf....