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TMI Blog2017 (10) TMI 1597X X X X Extracts X X X X X X X X Extracts X X X X ..... Jt. CIT, Rg-10/174/13-14) dismissed the appeal of the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds : "1. On the facts and circumstances of the case and in law, Hon. Commissioner of Income Tax, (Appeals), Pune-6 erred in disallowing the depreciation claimed for the cars used by the directors for officials work of the company but ownership documents in the name of individual director. 2. On the facts and circumstances of the case and in law, Hon. Commissioner of Income Tax, (Appeals), Pune-6 erred in disallowing the interest paid on the purchase of cars." 3. Both the grounds are inter-connected and are considered together. 4. During the course of assessment proceedings and on perusing the details furnished by the assessee, AO noticed that assessee has claimed depreciation aggregating to Rs. 7,38,073/- on certain vehicles. He further noticed that the vehicles have been purchased in the name of Shri Kanwarjeet Singh Sehgal, the Director of the assessee company and the vehicles are not registered in the name of the assessee. The assessee was asked to show cause as to why the depreciation not be disallowed s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Edwise Consultants (P.) Ltd. Vs. Addl. CIT, 4(3), Mumbai reported in 35 taxmann.com, 149 held that depreciation on the car will not be allowed in case the same is registered in the name of the Directors. For the sake of clarity, relevant portion of the order is reproduced as under: "7. We have heard the learned representatives on this point and have also gone through the record. We may observe that in this case all the three cars on which the assessee claims ownership and has claimed depreciation, were purchased by the assessee company in the individual names of the Directors. Not only invoice/bills have been issued in the individual names of the Directors, they are also the registered owners of the said cars. The claim of the assessee company is that the payment for the purchase of said cars was made by the assessee company and the said cars have been shown as assets in the books of account of the company. We do not agree with the contention of the learned AR in this respect. The assessee company has failed to give any explanation as to why the cars were purchased in the individual names of the Directors and registered in their name, when the company wanted to cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veyed to him consistently with the requirements of laws such as the Transfer of Property Act and the Registration Act, etc., but nevertheless is entitled to hold the property to the exclusion of all others." The Hon'ble Supreme Court has further observed as under: "It is well settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the Legislature in enacting section 32 of the Act would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purposes of his business or profession. Assigning any different meaning would not sub-serve the legislative intent. To take the case at hand it is the appellantassessee who having paid part of the price, has been placed in possession of the houses as an owner and is using the buildings for the purposes of its business in its own right. Still the assessee has been denied the benefit of section 32. On the other hand, the Housing Board would be denied the benefit of section 32 because in spite of its being the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee company was exercising its domain, possession and ownership over the property to the exclusion of all others and only because the documentation of the title deed was delayed due to certain reasons, that itself was not a ground to disallow the depreciation on the houses of which the assessee company was having use and possession being its owner. In the case of Navdurga Transport Co. (supra), the assessee firm was constituted of seven partners to carry on transport business. Four partners contributed money as capital while the other three partners brought their trucks into the firm as their capital contribution. The three vehicles were shown as assets of the firm in the balance-sheet. The AO rejected the claim of depreciation on the said vehicles. It was observed in the said authority that the vehicles were contributed by the partners as their capital contribution. The assessee firm appointed three agents for supervision, control and plying of vehicles. The three trucks became the assets of the firm and they were used through agents by the assessee firm. It was under such circumstances that the Tribunal came to the conclusion that the assessee owned and used the trucks thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing the same. Only because the said cars have been shown in the balance sheet or books of account as asset of the company, that does not mean that the company has become the owner of the same. As held by the Supreme Court in the case of 'Mysore Minerals Ltd.' (supra)', owner is one who is entitled to own the property to the exclusion of the others. In the present case, the assessee company cannot be said to be holding the property to the exclusion of the Directors especially when the cars are not only purchased in the name of the Directors but also they are the registered owners of the cars. The said Directors of the assessee company have not sold or transferred the cars to the company itself. The authorities cited by the assessee can be applied to a case where infact the property has been transferred to the assessee and the assessee has been using, possessing and exercising its rights as owner over it, but due to certain circumstances the title could not be transferred in the name of the assessee. But where a person who claims himself to be the owner of the property he does not without any sufficient explanation purchase the property in its own name and never make an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above decision of Mumbai Tribunal in case of Edwise Consultants (supra) supported the order of lower authorities. 6. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to the claim of depreciation and related expenses on the vehicles registered in the name of the Director of assessee company. It is an undisputed fact that the vehicles on which the depreciation has been disallowed and interest on loan taken on such vehicles are reflected in the audited Balance-sheet of the assessee and the repayment of the loan is also made by the assessee. The only reason for disallowance of depreciation was that the vehicles are not in the name of assessee but are in the name of the Director of assessee's company. The submission of the assessee that the vehicles have been used for the purpose of business of the assessee has not been controverted by Revenue. We find that Hon'ble Bombay High Court in the case of CIT Vs. Dilip Singh Sardarsingh Bagga reported in 1993 201 ITR 995 (Bom) had held that an assessee who has purchased the motor vehicle for valuable consideration and used the same for his business cannot be denied the benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of fixed asset of the assessee. The submission of the assessee that for the purchase of vehicle, the funds of the assessee has been used could not be controverted by the Revenue by bringing any material on record. We find that the Co-ordinate Bench in the case of Studio-3 Architect Pvt Ltd (supra) held as under:- "5. We have heard both the parties and gone through the facts of the case. The relevant provisions of section 32 of the Act stipulate depreciation in respect of building, machinery, plant or furniture "owned by the assessee" and "used" for the purposes of the business or profession. Indisputably, the innova car was purchased with the funds of the company and used by the assessee for the purposes of its business. The controversy is in regard to ownership of the car. The contention of the assessee is that car being not registered under the Motor Vehicles Act in the name of the company, by itself is not sufficient to hold the contrary. The factual position as stated by the assessee is not disputed by the Revenue. The contention of the Revenue is that unless the car is registered in the name of the assessee under the Motor Vehicles Act, the assessee would not be entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us, Revenue has not been brought any contrary binding decision in its support nor could point any distinguishable feature of the present case to that of Swati Autolink (supra). We therefore, respectfully following the decision of the Co-ordinate Bench in the case of Swati Autolink Pvt. Ltd. (supra) hold that the claim of depreciation and expenditure could not have been disallowed in the present case. Thus this ground of Assessee is allowed." We further find that Hon'ble Calcutta High Court in the case of CIT Vs. Salkia Transport Associates (1983) 143 ITR 39 (Cal) has in para 15 of the order has observed that the requirement of Sec.32 of the I.T. Act is that the vehicles must be "owned by the assessee". This section does not require that the assessee must be a registered owner of the vehicles in order to claim depreciation allowance in respect of him. We find that Ld.CIT(A) while denying the claim of depreciation had relied on the decision of Mumbai Tribunal in the case of Edwise Consultants (supra) for A.Y. 2007-08 (in ITA No.391/Mum/2011 order dt.19th April 2013). We further find that in the case of Edwise Consultants (supra), itself, for A.Y. 2008-09 to 2010-11 (ITA No.5376/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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