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TMI BlogLandmark Ruling: Leasing Businesses Entitled to Depreciation BenefitsX X X X Extracts X X X X X X X X Extracts X X X X ..... . Arguments Presented Assessee s Position The assessee, a non-banking finance company engaged in hire purchase, leasing, and real estate, claimed depreciation on vehicles leased out to customers. Despite the vehicles being registered in the name of the lessees, the assessee asserted ownership and entitlement to depreciation, arguing that the vehicles were used in their business of leasing, thus fulfilling the requirements of Section 32. The assessee also claimed depreciation at a higher rate on the ground that the vehicles were used in the business of running on hire. Revenue s Position The Revenue contended that since the vehicles were not registered in the assessee s name, the assessee was not the owner and thus not entitled to depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hstanding the fact that the assessee was not the actual user of the vehicles. The Court also referenced previous judgments, notably Commissioner of Income-Tax Versus First Leasing Co. of India Ltd. Shaan Finance (P.) Ltd. - 1998 (3) TMI 8 - Supreme Court . and Commissioner Of Income-Tax, Kerala II Versus Castlerock Fisheries - 1980 (2) TMI 37 - KERALA High Court , which supported the view that leasing vehicles constitutes business use. The assessee-lessor was, therefore, entitled to claim depreciation in respect of vehicles leased out since it has satisfied both the requirements of section 32 , namely, ownership of the vehicles and its usage in the course of business. Higher Rate of Depreciation The Court granted a higher depreciation rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 32 of the Act and also at a higher rate. Consequently, the appeals were allowed in favor of the assessee. Summary of the Judgement The Supreme Court upheld the assessee s entitlement to claim depreciation on leased vehicles under Section 32 of the Income Tax Act, 1961 , despite the vehicles being registered in the name of the lessees. The Court concluded that legal ownership and business use, as demonstrated through lease agreements, qualified the assessee for depreciation. Additionally, the Court affirmed that the assessee s business activities warranted a higher rate of depreciation, aligning with legislative and regulatory guidelines. This judgement reinforces the interpretation of ownership and usage in the context of asset dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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