SOUTHLAND CONSTRUCTIONS (INDIA) PRIVATE LIMITED,COIMBATORE vs. ITO CORPORATE WARD 3, COIMBATORE

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ITA 2585/CHNY/2018Status: DisposedITAT Chennai12 October 2021AY 2014-153 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the assessee made payments for the car and interest on the loan was allowed, and an affidavit confirmed business use, the depreciation claim should be allowed despite the director's name on registration.

What were the facts?

The assessee claimed depreciation on a motor car registered in the name of its director. The Assessing Officer denied the claim, but the assessee contended the car was used for business purposes and payments were made by the company.

What were the issues?

Whether depreciation on a motor car registered in a director's name, but used for business and paid for by the company, is allowable to the assessee.

Which sections of the Income-tax Act were involved?

Section 32

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI

Before: HON’BLE SHRI MAHAVIR SINGH, VP & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

For Appellant: Shri T.N.Seetharaman, Advocate, Shri G.Johnson – Ld. Addl. CIT
For Respondent: Shri G.Johnson – Ld. Addl. CIT

O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year [AY] 2014-15 arises out of the order of learned Commissioner of Income Tax (Appeals)-1, Coimbatore [CIT(A)] dated 27/07/2018 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s.143(3) of the Act on 26/12/2016. The only grievance of the assessee that it has been denied depreciation on Motor Car which was registered the name of one of the directors.

2.

Having heard rival submissions and after going through relevant material on record, our adjudication would be as given in succeeding paragraphs.

3.

The dispute stem from the fact that the assessee purchased a car in during April, 2013 in the name of one of the Director. For the said reason, Ld. AO denied depreciation claim of Rs.6.02 Lacs. During appellate proceedings, the assessee submitted that the vehicle was used for the business purposes. The payments were made by the assessee towards purchase of car. The interest paid on loan to purchase the car was claimed as well as allowed and therefore, the assessee was eligible to claim the depreciation in terms of decision of Hon’ble Supreme Court in Mysore Minerals Ltd. V/s CIT (239 ITR 775). 4. We find that it is undisputed fact that the assessee made payment of the car and it was also allowed interest paid on repayment of loan. There are no findings that the car was being used for the purpose of business. Therefore, merely because it was registered in the name of director would not vitiate depreciation claim of the assessee. The assessee has placed on record affidavit of the director wherein it has been confirmed that the vehicle was purchased by the assessee out of its own funds and the car was being used for business purposes only. Therefore, on the facts of the case, the depreciation claim would be allowable to the assessee as held by Ahmedabad Tribunal in the case of Sanatosh Starch Ltd. V/s DCIT (ITA No.1884/Ahd/2010 dated 19/11/2010) as relied upon by Ld. AR. Therefore, we direct Ld. AO to allow the depreciation.

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