1982 (8) TMI 77 - AT - Income Tax

Summary

Issues:
1. Claim for depreciation on a new bus (No. PUX 905) for assessment year 1978-79.

Detailed Analysis:
1. The assessee appealed against the order of the Commissioner, challenging the denial of a claim for depreciation on a new bus, No. PUX 905, for the assessment year 1978-79. The Income Tax Officer (ITO) disbelieved the claim, arguing that the bus was purchased on 28-4-1977, but registered only on 14-7-1977, after the accounting year had ended. The ITO contended that without registration and payment of road tax, the assessee could not have run the vehicle on the road, thus not entitled to claim depreciation under section 32 of the Income-tax Act, 1961. The Commissioner upheld the ITO's decision, emphasizing that only an owner, recognized in the eyes of the law, could claim depreciation. The lower authorities also rejected the plea based on income derived from the bus, stating it was from a different vehicle, No. PUS, not No. PUX 905.

2. The assessee argued that he was the full and legal owner of the bus, No. PUX 905, even before registration, as he had made the payment and possessed the vehicle. Registration was a legal requirement for road usage but did not determine ownership. The assessee contended that the lower authorities misunderstood the facts, as the accounts of bus No. PUS were actually for the new bus, No. PUX 905. The assessee clarified that there was no separate vehicle as PUS, and any discrepancy in accounts was due to an error. The assessee highlighted that the lower authorities wrongly differentiated between PUS and PUX, emphasizing that he was entitled to claim depreciation as the rightful owner. The Appellate Tribunal found the revenue's arguments unsubstantiated, concluding that the assessee was indeed entitled to claim depreciation on the bus.

3. The Appellate Tribunal disagreed with the lower authorities' findings, stating that the difference between PUS and PUX was insignificant and lacked evidential support. The Tribunal noted that the assessee had been assessed at a net loss even with accepted depreciation claims, indicating no prejudice to future claims. The Tribunal rejected the revenue's stance that registration was a prerequisite for ownership consideration, emphasizing that the assessee, having shown income from bus operations, was entitled to claim depreciation. Consequently, the Tribunal allowed the appeal, ruling in favor of the assessee's entitlement to depreciation on the bus, No. PUX 905.