Landmark Ruling: Leasing Businesses Entitled to Depreciation Benefits

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.... Arguments Presented Assessee's Position The assessee, a non-banking finance company engaged in hire purchase, leasing, and real estate, claimed depreciation on vehicles leased out to customers. Despite the vehicles being registered in the name of the lessees, the assessee asserted ownership and entitlement to depreciation, arguing that the vehicles were used in their business of leasing, thus fulfilling the requirements of Section 32.The assessee also claimed depreciation at a higher rate on the ground that the vehicles were used in the business of running on hire. Revenue's Position The Revenue contended that since the vehicles were not registered in the assessee's name, the assessee was not the owner and thus not entitled to depreci....

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....of section 32 has been fulfilled, notwithstanding the fact that the assessee was not the actual user of the vehicles. The Court also referenced previous judgments, notably Commissioner of Income-Tax Versus First Leasing Co. of India Ltd. & Shaan Finance (P.) Ltd. - 1998 (3) TMI 8 - Supreme Court. and Commissioner Of Income-Tax, Kerala II Versus Castlerock Fisheries - 1980 (2) TMI 37 - KERALA High Court, which supported the view that leasing vehicles constitutes business use. The assessee-lessor was, therefore, entitled to claim depreciation in respect of vehicles leased out since it has satisfied both the requirements of section 32, namely, ownership of the vehicles and its usage in the course of business. Higher Rate of Depreciation T....