1989 (7) TMI 166 - AT - Income Tax

Summary

Issues:
- Claim of depreciation in respect of a truck for assessment year 1981-82.

Analysis:
1. The primary issue in this case is whether the assessee was entitled to claim depreciation for a truck purchased during the relevant accounting period. The truck chassis was bought in February 1981, converted into a half-truck by March 1981, and registered in May 1981. The assessee claimed depreciation despite not using the truck for business purposes until after the accounting period. The Income-tax Officer rejected the claim due to lack of evidence of truck usage, delayed expenses debited to the truck account, and absence of income receipts from the truck during the relevant period.

2. The Appellate Asst. Commissioner upheld the Income-tax Officer's decision, emphasizing the lack of credible evidence supporting the truck's usage during the accounting year. The assessee presented a certificate from a transport union regarding the truck's registration in March 1981, but doubts were raised about the authenticity of the certificate and the credibility of the contractor who allegedly hired the truck.

3. During the appeal before the ITAT, the assessee's representative argued that the truck was ready for use in March 1981, even if not actively used for business purposes. However, the Departmental Representative relied on legal provisions and precedents to counter this argument, emphasizing the necessity of actual usage or readiness for use during the accounting period for depreciation claims.

4. The ITAT considered the legal requirements for claiming depreciation under section 32, highlighting that the vehicle must be ready for use and fit for operation during the relevant period. The Motor Vehicles Act prohibits driving unregistered vehicles, indicating that the truck in question was not legally ready for use until after the accounting year. The ITAT dismissed the assessee's claim, noting the lack of credible evidence supporting the truck's alleged usage in March 1981 and the absence of proper accounting entries related to the truck's operation.

5. Ultimately, the ITAT concluded that the assessee's claim for depreciation on the truck was not substantiated by sufficient evidence and was deemed disallowable based on the facts presented. The appeal was dismissed, affirming the decisions of the lower tax authorities and denying the assessee's claim for depreciation on the truck for the assessment year 1981-82.