2012 (10) TMI 1172 - AT - Income Tax

Disallowance the depreciation on motor car registered in the name of the director - Held that - The assessee is entitled to depreciation on the cars as though they are named in the name of director were to be used for the business of the assessee and not for personal use. Accordingly we while deleting the disallowance made by the A.O. and enhancement made by the ld. CIT(A) in this regard allow the claim of the assessee.

Summary

Issues: Delay in filing appeal, Disallowance of depreciation on motor car

Issue 1: Delay in filing appeal

The appeal filed by the assessee was delayed by 17 days due to the absence of the Managing Director, who was out of station and unable to sign the appeal paper in time. The delay was condoned by the tribunal after considering the explanation provided by the assessee and the affidavit filed by the Managing Director. The Delay was condoned, and the appeal was admitted.

Issue 2: Disallowance of depreciation on motor car

The Assessing Officer disallowed depreciation claimed by the assessee on a car, as it was registered in the name of a director, not the company. The CIT(A) upheld the disallowance, stating that the company violated registration laws by not transferring the vehicle's ownership. The CIT(A) directed the AO to disallow 100% depreciation, enhancing the income of the assessee. The assessee appealed, arguing that the car was purchased with company funds, shown in the company's balance sheet, and used for business purposes.

Analysis on Disallowance of Depreciation:

During the hearing, the assessee contended that despite the car being in the director's name, it was acquired and used for business purposes by the company, justifying the claim for depreciation. The tribunal examined the facts and concluded that the car's ownership was with the company, and it was utilized for business activities. Citing precedents like Dilip Singh Sardarsingh Bagga and Metalman Auto P. Ltd., the tribunal emphasized that registration under the Motor Vehicles Act does not affect ownership transfer and does not bar depreciation claims.

Precedent References:

The tribunal referred to various precedents, including Dilip Singh Sardarsingh Bagga and Metalman Auto P. Ltd., to support the assessee's claim for depreciation on the car. These cases established that ownership transfer under the Motor Vehicles Act does not impact the right to claim depreciation if the asset is used for business purposes, even if registered in an individual's name.

Decision:

The tribunal, in line with the cited precedents and considering the absence of contradictory evidence from the Revenue, allowed the assessee's claim for depreciation on the car. The disallowance made by the AO and the enhancement by the CIT(A) were both overturned, and the tribunal ruled in favor of the assessee, allowing the depreciation claim. Consequently, the assessee's appeal was allowed, and the order was pronounced on 17-10-2012.

This detailed analysis covers the issues of delay in filing the appeal and the disallowance of depreciation on the motor car, providing a comprehensive understanding of the tribunal's judgment in the case.