1983 (9) TMI 112 - AT - Income Tax

Summary

Issues:
Claim for depreciation on lorries not registered in assessee's name during accounting year.

Analysis:

1. The assessee purchased two lorries but did not have them registered in their name until the end of the accounting period. The Income Tax Officer (ITO) disallowed depreciation, stating that the lorries were not registered in the assessee's name during the year. The Commissioner (Appeals) upheld this decision.

2. The assessee argued that ownership should not be solely determined by registration under the Motor Vehicles Act, as they had possession and control of the lorries since purchase. The departmental representative contended that ownership is a prerequisite for claiming depreciation under section 32 of the Income-tax Act, 1961.

3. The Appellate Tribunal examined the situation and concluded that ownership of the lorries passed to the assessee upon delivery and payment, even without registration under the Motor Vehicles Act. Citing legal precedents, the Tribunal emphasized that registration is not conclusive proof of ownership, and the transfer of ownership is crucial.

4. The Tribunal highlighted that the Motor Vehicles Act does not mandate registration for ownership, and section 31 only requires notification of ownership transfer. It was clarified that section 32 of the Income-tax Act does not necessitate registration under the Motor Vehicles Act for claiming depreciation, emphasizing ownership and usage for business purposes.

5. Referring to legal judgments, including CIT v. Salkia Transport Associates and Addl. CIT v. U.P. State Agro Industrial Corpn. Ltd., the Tribunal reiterated that registration is not a prerequisite for ownership. The decision in R.B. Jodha Mal Kuthiala v. CIT was cited to emphasize different interpretations of ownership in various contexts.

6. Considering conflicting decisions, the Tribunal favored the view beneficial to the assessee, following the principle established in CIT v. Vegetable Products Ltd. The Tribunal ultimately held that the assessee, having purchased and used the lorries for business, met the ownership criteria under section 32, thus entitling them to claim depreciation.

7. Consequently, the appeal was allowed, directing the ITO to permit the depreciation claim on the two lorries. The Tribunal's decision was based on the understanding that ownership, not registration, is pivotal for claiming depreciation under section 32 of the Income-tax Act.