SPAN AIR PVT. LTD,NEW DELHI vs. ACIT, CIRCLE-24(1), NEW DELHI

This appeal filed by the assessee is directed against the order dated 04.02.2019 passed by the Commissioner of Income Tax (Appeals) – XXV, New Delhi for Assessment Year 2015-16.

1. “That having regard to the facts of the case , provisions of law and judicial propositions the Ld. CIT(A) grossly erred in disallowing Rs.6,42,840/- in considering vehicle registration date i.e. 22/11/2014 as the date when the vehicle was available for use and thus allowed only 50% depreciation u/s 32 of the Income Tax Act disregarding the provisions of law including that of judicial precedents where it was established that for claiming depreciation under section 32 there is no need that vehicle should be registered under " Motor Vehicles Act" in the assessee's name , hence impugned disallowance of Rs.6,42,840/- is arbitrary and untenable deserves to be deleted in full.

2. Without prejudice point no-1, That having regard to the facts of the case, provisions of law and judicial propositions the Ld. CIT(A) grossly erred in disallowing Rs.6,42,840/- in considering vehicle registration date i.e. 22/11/2014 as the date when the vehicle was available for use and thus allowed only 50% depreciation u/s 32 of the Income Tax Act as the vehicle was available to use for less than 180 days. AO has been grossly erred in disregarding judicial pronouncements of several High Courts including that of Jurisdictional Delhi High Court where it has been held that the expression "used for the purpose of the business" for claiming depreciation u/s 32 , the use of the asset may be active or passive i.e kept ready for use. Date of possession of asset and keeping ready for use in the business shall be date for claiming depreciation i.e 28.09.2014 thus assessee is entitled 100% depreciation, hence impugned disallowance of Rs.6,42,840/- is arbitrary and untenable shall be deleted .

Span Air Pvt. Ltd. vs. ACIT 3 3. The appellant craves the right to amend, add, delete, replace, all or any of the grounds of appeal either during the course of hearing or at any time before hearing of this appeal.”

5. Before us, Learned AR submitted that though assessee has raised various grounds but the sole issue is with respect to the disallowance of depreciation.

Span Air Pvt. Ltd. vs. ACIT 4 placed on record the copy of the invoice of the purchase of vehicle. He also placed on record the copy of the Certificate issued by vendor of the vehicle specifying the delivery of the vehicle to be on 28.09.2014. He, thereafter, placed reliance on the decision of Delhi High Court in the case of National Thermal Power Corporation Ltd. vs. Commissioner of Income-tax (2012) 28 taxmann.com 89 (Delhi) wherein the Hon’ble High Court has held that the expression ‘used for the purposes of the business’ under section 32 of the Act would also mean an asset which is kept ready for use but is not actually put to use. He also placed reliance on the decision of Delhi High Court in the case of CIT vs. Refrigeration and Allied Industries Ltd. (2000) 113 Taxman 103 (Delhi – H.C.) wherein the Hon’ble High Court has held that the expression ‘used’ in Section 32(1) of the Act includes both passive and active user. He, therefore, submitted that the AO was not justified in disallowing the 50% claim of depreciation. He, therefore, submitted that assessee be allowed the full depreciation.

Span Air Pvt. Ltd. vs. ACIT 5 was thus in the possession of the assessee before 30.09.2014. The aforesaid factual submissions of the assessee has not been controverted by Revenue. We find force in the argument of Learned AR that since the assessee had paid for the entire purchase cost and had vehicle in its possession before 30.09.2014 and simply because the registration was done on 22.11.2014, the assessee cannot be denied the benefit of depreciation for the full year. We find support in the decision of Hon’ble Delhi High Court in the case of National Thermal Power Corporation Ltd. vs. Commissioner of Income-tax (supra) wherein the Hon’ble High Court has held that ‘used for the purposes of the business’ would include the asset which is kept ready for use but actually not put to use. Before us, Revenue has not pointed to any contrary binding decision in its support. In such a situation, we hold that assessee is entitled for deprecation for entire year. We, therefore, direct the AO to allow the claim of depreciation for the entire year. Thus the ground of assessee is allowed.

Order pronounced in the open court on 31.05.2023