Cars in the Name of Directors ; Depreciation allowable in the hands of Company : Ahmedabad ITAT

Assessee entitled to deduction for depreciation & interest on loan in respect of cars registered in director’s name; Cars utilized for business purpose & formed part of assessee’s block of assets; Term ‘own’, ‘ownership’ and ‘owned’ to be assigned such meaning as to enable assessee to secure benefit intended to be given by Legislature; SC ruling in Mysore Minerals relied upon : Swagat Infrastructure Ltd. (Ahmedabad ITAT)

Note : Mumbai ITAT in Edwise Consultants Pvt. Ltd. Vs. ACIT had held that depreciation on cars, registered in the name of directors, was not allowable. ITAT distinguished SC ruling in Mysore Minerals Ltd. and observed that there was no compulsion or explanation for purchasing car in directors’ names. ITAT also held that assessee could not be treated as owner by mere disclosure of cars as asset in balance sheet. However, co-ordinate bench, in another ruling in case of Dhimant Mehta Computing Solutions Private Limited, had held that beneficial ownership of asset was sufficient to claim depreciation, if asset was used for the purpose of business. ITAT rejected Revenue’s contention that legal ownership of motor car with assessee company was necessary to claim depreciation.

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