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2023 (6) TMI 218 - AT - Income TaxDisallowing 50% of depreciation on vehicle - vehicle was registered in the second half of the relevant previous year - HELD THAT - We find force in the argument of AR that since the assessee had paid for the entire purchase cost and had vehicle in its possession before 30.09.2014 and simply because the registration was done on 22.11.2014, the assessee cannot be denied the benefit of depreciation for the full year. We find support in the decision of National Thermal Power Corporation Ltd. 2012 (10) TMI 720 - DELHI HIGH COURT wherein as held that used or the purposes of the business would include the asset which is kept ready for use but actually not put to use. Before us, Revenue has not pointed to any contrary binding decision in its support. In such a situation, we hold that assessee is entitled for deprecation for entire year. Direct the AO to allow the claim of depreciation for the entire year. Thus the ground of assessee is allowed.
Issues: Disallowance of depreciation on vehicle registration date and entitlement to claim full depreciation.
Disallowance of Depreciation on Vehicle Registration Date: The appeal was against the order passed by the Commissioner of Income Tax for Assessment Year 2015-16. The assessee, a company providing non-scheduled flights, filed its return of income declaring a loss. The assessment was framed under section 143(3) of the Income Tax Act, determining the total loss. The grounds of appeal raised by the assessee primarily focused on the disallowance of depreciation on the vehicle registration date. The assessee contended that the depreciation should not have been disallowed as the vehicle was ready for use before the registration date. The Assessing Officer disallowed 50% of the depreciation based on the registration date, which the CIT(A) upheld. The assessee argued that the vehicle was purchased and ready for use before the registration date, thus entitling them to claim 100% depreciation. The assessee provided evidence to support their claim, including the purchase invoice and delivery certificate. The Delhi High Court decisions were cited to support the argument that "used for the purposes of the business" includes assets kept ready for use. The Tribunal found merit in the assessee's submissions, noting that the vehicle was in possession before the registration date, and directed the AO to allow the claim of depreciation for the entire year. Entitlement to Claim Full Depreciation: The main issue before the Tribunal was the disallowance of depreciation on the vehicle based on the registration date. The assessee contended that since the vehicle was purchased and ready for use before the registration date, they were entitled to claim 100% depreciation for the full year. The Revenue supported the lower authorities' decision. The Tribunal considered the factual submissions of the assessee, noting that the purchase was made and possession of the vehicle was taken before the registration date. The Tribunal relied on the Delhi High Court decision, which clarified that assets kept ready for use but not actively used also qualify as "used for the purposes of the business." Since the Revenue did not provide any contrary binding decision, the Tribunal held in favor of the assessee, allowing the claim of depreciation for the entire year. As a result, the appeal of the assessee was allowed. Separate Judgment: No separate judgment was delivered by the judges in this case.
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