2004 (8) TMI 95 - HC - Income Tax

Depreciation - Dispute raised in this case is against the findings of the Tribunal that the assessee is entitled to depreciation on the buses which were standing in the names of the directors - Tribunal concluded that there was ample evidence on record to show that the assessee had taken over the buses from the directors and the mere fact that the same were not got registered in the names of the assessee could not be a ground for disallowing the claim of depreciation - in the context of the Income-tax Act, 1961, having regard to the ground realities and further having regard to the object of this Act, namely, to tax the income, owner is a person who is entitled to receive income from the property in his own right. No infirmity in tribunal s order

Summary

Issues:
- Appeal under section 260A of the Income-tax Act, 1961 against the order of the Income-tax Appellate Tribunal regarding depreciation on buses initially purchased by directors but taken over by the assessee.
- Dispute raised against the findings of the Tribunal regarding the entitlement of the assessee to claim depreciation on the buses.

Analysis:
The High Court dealt with an appeal filed by the Revenue against the order of the Income-tax Appellate Tribunal concerning the assessment year 1989-90. The dispute revolved around the Tribunal's decision that the assessee was entitled to claim depreciation on buses that were initially purchased by the directors but later taken over by the assessee. The Tribunal found that the buses were acquired by the directors with financing in their individual names, but were subsequently transferred to the assessee company. The income from these buses was declared and assessed by the assessee, with related expenses also claimed as deductions. The buses' costs were reflected in the company's balance sheet, and the liability towards the bank for these buses was categorized as "Secured loans." The Tribunal concluded that the assessee had indeed taken over the buses from the directors, and the absence of formal registration in the assessee's name did not invalidate the claim for depreciation.

The High Court supported the Tribunal's decision by referencing the law established by the apex court in CJT v. Podar Cement Pvt. Ltd. [1997] 226 ITR 625. The court clarified that for the purposes of the Income-tax Act, 1961, the term "owner" refers to the individual entitled to receive income from the property, rather than the legal owner as defined by common law. This interpretation aligns with the objective of the Income-tax Act to tax income effectively. Additionally, the High Court noted the approval of this interpretation by the Allahabad High Court in Addl. CIT v. U.P. State Agro Industrial Corporation Ltd. [1981] 127 ITR 97. Given the consistency of the Tribunal's decision with the legal precedents cited, the High Court concluded that no substantial question of law merited the court's opinion, resulting in the dismissal of the appeal filed by the Revenue.