2005 (7) TMI 67 - HC - Income Tax

Depreciation on vehicle - Tribunal disallowing the claim of depreciation assessee contend that the dominion in respect of the vehicle was with the appellant-company and the law was settled that the non-registration of vehicle in the name of the assessee was not a bar for the purposes of claiming depreciation - No records were produced by the assessee to show that the utility of the vehicle was in the normal course for the benefit of the company. In fact as per the findings recorded by the Tribunal even beneficial ownership also does not vest in the assessee-company. We see no reason to disturb the concurrent view taken by the authorities. The question proposed by the appellant thus cannot be stated to be a substantial question of law arising from the order of the Tribunal Assessee s appeal dismissed

Summary

Issues:
1. Disallowance of claim of depreciation for a vehicle by the Income-tax Appellate Tribunal.

Analysis:
The judgment revolves around the issue of disallowing the claim of depreciation for a vehicle by the Income-tax Appellate Tribunal. The appellant company claimed depreciation on a Toyota Qualis vehicle purchased during the relevant financial year. The company argued that even though the vehicle was not registered in its name, dominion over the vehicle was with the company, making it eligible for depreciation. The Assessing Officer disallowed the claim, stating that as the vehicle was registered in the name of a director, depreciation could not be claimed. The Commissioner of Income-tax (Appeals) affirmed this decision, emphasizing the need for substantiating business use of the vehicle. The Income-tax Appellate Tribunal further ruled against the company, highlighting that legal ownership did not vest in the company. The appellant contended that dominion over the vehicle was with the company, citing relevant case laws. However, the respondent argued that ownership of the asset is a prerequisite for claiming depreciation, which was lacking in this case. The courts emphasized that both ownership and business use are essential for depreciation claims under section 32 of the Income-tax Act.

The appellant relied on judgments supporting their claim of dominion over the vehicle, while the respondent emphasized the importance of ownership for depreciation claims. The courts noted that the company failed to prove ownership or dominion over the vehicle, as it was registered in the director's name and not reflected as a perk provided to the director. The courts distinguished previous cases where ownership was established for depreciation claims. Ultimately, the courts dismissed the appeal, stating that the question raised by the appellant was not a substantial question of law in the context of the case's facts and circumstances. The parties were directed to bear their own costs, upholding the disallowance of the claim of depreciation for the vehicle by the Income-tax Appellate Tribunal.