2012 (7) TMI 1132 - AT - Income Tax

Summary

Issues involved: Disallowance of depreciation on a car for the assessment year 2006-2007.

Summary:
The appeal was filed against the order of the Commissioner of Income-tax (Appeals)-XIV, Ahmedabad, regarding the disallowance of depreciation on a car amounting to Rs. 50,260. The assessee argued that even though the car was registered in the name of a director, it was purchased using the funds of the assessee-company and was reflected as an asset in its balance sheet, establishing ownership by the company. The Revenue contended that ownership must be proven for depreciation to be allowed. The Tribunal noted that the vehicle was indeed bought with company funds and was an asset on the balance sheet, concluding that the ownership remained with the company. As long as the conditions of section 32 for claiming depreciation were met, the assessee was entitled to the deduction. The Tribunal also highlighted that in a previous assessment year, the claim for depreciation was allowed by the CIT(A) without further appeal to the Tribunal. Despite the lack of evidence regarding business use of the vehicle, the Tribunal ruled in favor of the assessee, stating that the claim of depreciation was valid due to ownership by the company and actual usage during the relevant period. Consequently, the disallowance of Rs. 50,260 as depreciation on the car was overturned, and the appeal of the assessee was allowed.