1989 (3) TMI 34 - HC - Income Tax

Summary

Issues involved: Interpretation of ownership for depreciation allowance on vehicles u/s Income-tax Act.

Summary:
The High Court of Kerala considered three references at the instance of the Revenue regarding depreciation allowance on vehicles used by the assessees under the Income-tax Act. The main question was whether the assessees were entitled to depreciation on vehicles not transferred in their names in the certificate of registration. The Appellate Assistant Commissioner and the Appellate Tribunal held that the assessees had become de facto owners of the vehicles and were entitled to depreciation. The Revenue argued that ownership is established only after transfer in the registration certificate, citing section 31 of the Motor Vehicles Act. However, the Court held that transfer of ownership of a motor vehicle is governed by the Sale of Goods Act, and registration is not necessary to pass title. Relying on previous decisions, the Court concluded that the assessees, who purchased and used the vehicles, were indeed owners entitled to depreciation. Both questions referred were answered in favor of the assessees and against the Revenue.

Additionally, the Court noted that a similar question raised by the Revenue in an earlier year was dismissed. A copy of the judgment was to be sent to the Income-tax Appellate Tribunal, Cochin Bench for reference.