2011 (5) TMI 1079 - AT - Income Tax

Summary

Issues involved: Appeal against CIT(A)'s order allowing depreciation claim on vehicles owned by Directors of the assessee for A.Y. 2006-07.

The appellant, the Revenue, filed an appeal against the CIT(A)-III Pune's order dated 24-7-2009 for A.Y. 2006-07, questioning the allowance of depreciation claim on vehicles owned by the Directors of the assessee. The assessee company, engaged in the dealership of General Motor cars, claimed depreciation on Demo cars purchased in the name of directors. The Assessing Officer disallowed the claim, stating that although the vehicles were used for business purposes, their ownership did not belong to the assessee. However, the CIT(A) allowed the claim based on a decision of the Tribunal Pune Bench in a similar case.

The Revenue, being dissatisfied, appealed before the ITAT Pune. The Revenue's representative relied on the Assessing Officer's order, while the assessee's counsel supported the CIT(A)'s decision. The assessee's counsel also cited a decision of the Pune Bench of the Tribunal in another case where the issue was decided in favor of the assessee. After considering the arguments and evidence, the ITAT Pune observed that the issue was already settled by a previous decision of the Pune Bench of the Tribunal. In that case, it was held that depreciation was allowable to the assessee for motor cars used in business, even if registered in the name of the Managing Director. The ITAT Pune found the present case to be similar to the previous case and upheld the CIT(A)'s decision to allow the depreciation claim.

Therefore, the ITAT Pune dismissed the Revenue's appeal, affirming the CIT(A)'s order allowing the depreciation claim on vehicles owned by the Directors of the assessee for A.Y. 2006-07.