1992 (11) TMI 142 - AT - Income Tax

Summary

Issues Involved:
1. Non-allowing of depreciation claim on commercial vehicles.
2. Observation that commercial vehicles were not put to use.
3. Lack of valid certificate of registration.
4. Insufficient evidence of actual use of commercial vehicles.
5. Lease agreement considered non-genuine.

Summary of Judgment:

1. Non-allowing of depreciation claim on commercial vehicles:
The appeal was filed by the assessee, a leasing company, aggrieved by the non-allowing of a claim of depreciation of Rs. 53,65,210 on commercial vehicles purchased by it. The assessee argued that it had purchased 54 DCM Toyota commercial vehicles, paid the total consideration, and received temporary registration and insurance for the vehicles. The vehicles were leased to M/s DCM Toyota Ltd., and the lease rental was credited to the P&L account.

2. Observation that commercial vehicles were not put to use:
The assessee contended that the vehicles were used for its business of leasing, satisfying the conditions u/s 32 of the IT Act, which requires the assets to be owned and used for business. The primary objection from the authorities was the lack of a public transport permit under the Motor Vehicles Act. The assessee argued that the permit was necessary for the sub-lessees, not for the leasing business itself.

3. Lack of valid certificate of registration:
The authorities argued that the temporary registration was insufficient. The assessee countered that temporary registration is normally issued by dealers to enable the purchaser to lift the vehicles and that the vehicles were insured and delivered to the assessee. The Tribunal found that the temporary registration and insurance were sufficient to establish ownership.

4. Insufficient evidence of actual use of commercial vehicles:
The Tribunal examined the lease agreement, invoices, insurance documents, and temporary registration certificates. It concluded that the vehicles were indeed leased out and used for the business of leasing, satisfying the requirement of use for business purposes u/s 32(1).

5. Lease agreement considered non-genuine:
The Tribunal found no evidence to support the authorities' claim that the lease agreement was non-genuine. The agreement was acted upon, and there was no retraction by DCM Toyota Ltd. The Tribunal held that the lease agreement was genuine and that the assessee was entitled to depreciation.

Conclusion:
The Tribunal concluded that the assessee satisfied the conditions u/s 32(1) for claiming depreciation, as the vehicles were owned and used for its business of leasing. The appeal was allowed, and the claim for depreciation on the 54 vehicles was justified.