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Facts
The revenue appealed against the CIT(A)'s order deleting depreciation additions on trucks and home theatre/motor car. The assessee claimed depreciation on trucks purchased by the firm but registered in the partner's name. The AO disallowed depreciation on grounds of ownership, and similarly disallowed depreciation on home theatre and car due to presumed personal usage.
Held
The Tribunal held that the CIT(A) correctly deleted the disallowance of depreciation on trucks as the firm had purchased them and reflected them in its assets, and also followed the Supreme Court's ruling on the wider meaning of 'owned' in Section 32(1). The disallowance on home theatre and car was also deleted as it was made on an ad-hoc basis without evidence of personal usage.
Key Issues
Whether the CIT(A) erred in deleting depreciation on trucks not registered in the firm's name and on home theatre/motor car, and whether the decision followed relevant precedents.
Sections Cited
32(1)
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE
O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the revenue is preferred against the order of the ld. CIT(A)-51, Mumbai [hereinafter ‘the ld. CIT(A)’], dated 29/10/2024, pertaining to AY 2014-15.
The grievance of the revenue read as under:- “1. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made on account Of expenses depreciation in respect of Block of assets amounting to Rs.2,50,69,971/- out of total depreciation claimed of Rs.4,32,05,874/- on Trucks without appreciating the facts brought on record by the AO that these vehicles were not registered in the name of assesses firm. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not following the Hon'ble JTAT, Mumbai decision in the case of Edwise consultant Pvt Ltd, 35 Taxmann.com 149. 3. Whether on the facts and circumstances of the case and in law, the Ld. ClT(A) erred in deleting the addition made on account of depreciation claim on Home Theatre and Motor Car amounting to Rs.4,07,687/-.
2 4. The appellant craves the leave to add, substitute, modify, alter, delete or amend all or any ground of appeal either before or at the time of hearing.”
3. Briefly stated the facts of the case are that the assessee is engaged in the business of providing transport services and filed its return electronically on 31/10/2014 declaring total income at Rs. 4,12,07,910/- . During the course of the scrutiny assessment proceedings, the AO asked the assessee to produce bills of sales of vehicles. The assessee explained that it has sold the vehicles out of the block of vehicles on which it has claimed depreciation @ 30%. The AO found that the vehicles are in the name of partner and not in the name of the partnership firm. The AO was of the opinion that the assessee has not provided any details regarding the ownership of vehicles as the ownership lies with the partner and not the partnership firm. Since the AO has formed the belief that the assessee firm is not the owner of the vehicles, he disallowed the claim of depreciation of Rs. 4,61,09,712/-.
4. When the matter was agitated before the ld. CIT(A) it was strongly contended that though the vehicles are registered in the name of partner for the sake of convenience but were purchased by the firm and are duly reflected in the block of asset of the firm. The ld. CIT(A) after considering the submission of the assessee was convinced that the assessee has been using these trucks regularly and the same form a part of its own balance sheet and block of assets. The ld. CIT(A) further found that the purchase consideration was paid by the assessee firm and also the interest on the financing of these trucks. The ld. CIT(A) accordingly deleted the disallowance of depreciation.