TMI Blog2017 (10) TMI 1597X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration and used the same for his business cannot be denied the benefit of depreciation on the ground that the transfer was not recorded under the Motor Vehicles Act or that the vehicle to be in the name of the vendors. As decided in SWATI AUTO LINK P. LTD VERSUS INCOME TAX OFFICER [ 2013 (2) TMI 727 - ITAT AHMEDABAD] mere non-registration of a vehicle in the name of company under the Motor Vehicles Act cannot disentitle an assessee to its claim of depreciation, when the investment for purpose of vehicle had made and it being used for the purpose of business is an undisputed fact. It further noted that the requirement of Section 32 of the Act is that the vehicle must be owned by the assessee and not that the assessee must be a registered owner under the same Motor Vehicles Act. We further find that Hon ble Calcutta High Court in the case of CIT Vs. Salkia Transport Associates [ 1982 (9) TMI 28 - CALCUTTA HIGH COURT] as 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 respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that the cars were used for the purpose of assessee s business and that though the cars were registered in the name of the Director of assessee s company but for all practical purposes, the assessee is the owner of the cars, was not found acceptable to AO. He accordingly disallowed the claim of depreciation aggregating to ₹ 7,38,073/-. AO also noted that assessee has claimed finance charges being interest on car loans and insurances on the aforesaid cars, aggregating to ₹ 2,91,947/-. AO held that since vehicles are not owned by the assessee s company, the expenditure on account of interest and insurance incurred on such vehicles are also not allowable. He accordingly disallowed the finance charges of ₹ 2,91,947/- also. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A) who upheld the order of AO by observing as under : 8. I have carefully considered the facts of the case as well as reply filed in this regard. In this case the appellant claims that while the Directors were borrower, the appellant company was co-borrower as per the agreement for auto loan filed in the Paper Books. The concept of coowner is not clarified in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he authorities cited by him it has been held that it is not necessary that the cars should be registered in the name of the company. He has further stressed that even if the cars are not registered in the name of the company itself is no ground for disallowance of depreciation on the cars especially when the said cars are found in the list of assets as well as books of account of the company. In our view the authorities cited by the learned AR does not fit into the facts and circumstances of this case. Firstly, we take up the authority of the Hon'ble Supreme Court in the case of 'Mysore Minerals Ltd. (supra). The said case is relating to the ownership of a building. In the said case the assessee company had purchased for the use of its staff seven low income group houses from the Housing Board. The assessee had made part payment and was in turn given allotment of the houses followed by delivery of possession by the Housing Board. The actual deed of conveyance was not yet executed by the Housing Board in favour of the assessee. The assessee made a claim u/s. 32 of the Act in respect of depreciation of buildings used for the purpose of the business of the assessee. The cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion. We do not think such a benefit-tonone situation could have been intended by the Legislature. The finding of fact arrived at in the case at hand is that though a document of title was not executed by the Housing Board in favour of the assessee, but the houses were allotted to the assessee by the Housing Board, part payment received and possession delivered so as to confer dominion over the property on the assessee whereafter the assessee had in its own right allotted the quarters to the staff and they were being actually used by the staff of the assessee. It is common knowledge, under the various schemes floated by bodies like housing boards, houses are constructed on a large scale and allotted on part payment to those who have booked. Possession is also delivered to the allottee so as to enable enjoyment of the property. Execution of documents transferring title necessarily follows if the schedule of payment is observed by the allottee. No third person intervenes. The part payments made by the allottee are with the intention of acquiring title. The delivery of possession by the Housing Board to the allottee is also a step towards conferring ownership. Documentation is delayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners, who initially acquired the vehicles. Though the registration of the vehicle could not be made in the name of the firm, the assessee firm was in a position to exercise the rights of an owner and not on behalf of the person in whom the title vested, but in its own rights. Similarly, in the case of 'Dilip Singh Sardarsingh Bagga' (supra), the assessee had purchased a truck from one Shri Agrawal. The brand new truck was originally allotted to Mr. Agarwal. Since the vendor did not have sufficient funds to purchase the truck, he made an offer to the assessee to finance the purchase of the said truck and to operate the said truck on licence as owning to the restrictions under the Motor Vehicles Act. The truck in question could not be registered immediately in the name of the assessee. It was under such circumstances, the Hon'ble Bombay high Court held that the assessee, who had actually purchased the motor vehicle, for valuable consideration and used the same for business cannot be denied the benefit of depreciation on the ground that due to some restrictions its transfer was not recorded in the name of the assessee under the Motor Vehicles Act. Thus, in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own name, rather allows deliberately its title registration in the name of other person cannot claim its ownership to the exclusion of the said registered owner/purchaser of the property. The purchase of the cars in the name of other persons by the assessee company itself implies that the assessee company treated the said persons as owner of the property and did not want to exercise its domain over the property. Merely because the company has shown the cars as its assets in the books of account, cannot put it into the definition of owner of the cars to the exclusion of the legal/registered owners of the cars. Under such circumstances, the company cannot be said to the owner of the cars even in the light of the extended definition of ownership u/s. 32(1) of the I.T Act. The learned CIT(A) has rightly observed that payment having been made by the assessee company for the cars which were purchased by the Directors in their own name requires that such payment be treated as advance/loan to the Directors. The findings of the learned CIT(A) on this issue is hereby upheld. Aggrieved by the order of Ld. CIT(A), assessee is now in appeal before us. 5. Before us, Ld.A.R. reiterated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t recorded under the Motor Vehicles Act or that the vehicle to be in the name of the vendors. We further find that the Co-ordinate Bench of the Tribunal in the case of Swati Auto Link P. Ltd., Vs. ITO in ITA No.1471/Ahd/2010 reported in 2013 35 CCH 146 (Ahd) has after relying on the decision in the case of ITO Vs. Studio-3, Architect Pvt. Ltd., in ITA No.1841/Ahd/2009 held that mere non-registration of a vehicle in the name of company under the Motor Vehicles Act cannot disentitle an assessee to its claim of depreciation, when the investment for purpose of vehicle had made and it being used for the purpose of business is an undisputed fact. It further noted that the requirement of Section 32 of the Act is that the vehicle must be owned by the assessee and not that the assessee must be a registered owner under the same Motor Vehicles Act. We further find that the Co-ordinate Bench of the Ahmedabad Tribunal in the case of Aflon Alplast Pvt. City Mill Compound (ITA No.1186/Ahd/2012 order dt.30.01.2015) and after relying on the various decisions has decided the issue in faovur of assessee by holding as under : 7. We have heard the rival submissions and perused the material on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof. We are of the opinion that the assesses, who had purchased the car for valuable consideration and used the same for its business, cannot be denied the benefit of depreciation on the ground that the transfer was not recorded under the Motor Vehicles Act or that the vehicle stood in the name of a director of the assessee company in the records of the authorities under the Motor Vehicles Act. 5.1 The aforesaid view is supported by the decision in the case of CIT Vs. Navdurga Transport Co., 235 ITR 150 (All), wherein the issue was as to whether firm was entitled to depreciation on cars, brought in to the firm for use of business of the firm, even through cars continued to be registered in the name partners. Hon ble Allahabad High Court held that the Tribunal rightly reached the conclusion that the assessee owned and used the three vehicles within the meaning of s. 32 of the Act. Similar view was taken in the case of CIT Vs, Mohd. Bus Shokat Ali (No.2), 256 ITR 357 (Raj), CIT Vs Fazilka Dabwali TPT Co. Ltd (2004) 270 ITR398 (P H), CIT v. Salkia Transport Associates [1983] 143 ITR 39/13 Taxman 191 (Cal.), CIT v. Nidish Transport Corpn. [1910] 185 ITR 669/[1989] 44 Taxman 35 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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