Case Law Details
DECIDED BY: HIGH COURT OF KERALA, IN THE CASE OF: CIT Vs. Manappuram General Finance & Leasing Ltd., APPEAL NO: ITA No. 1186 of 2009, DECIDED ON January 13, 2010
RELEVANT PARAGRAPH
The sole question raised in all the appeals filed by the revenue is whether the Income Tax Appellate Tribunal was justified in holding that the respondents/asscssees, which are engaged in financing of vehicle purchases, are entitled to higher rate of depreciation applicable to motor vehicles used in the business of running them on hire. Rightly or wrongly, the assessing officer allowed depreciation at the rate of 20 which is the rate applicable to motor vehicles used in business or profession by the assessees. When the appeals came up for hearing in the earlier occasion, this Count expressed doubt about the correctness of the facts stated before the lower authorities including the Tribunal and therefore, the assessing officer was directed to conduct inquiry about ownership and nature of transaction between the respondents/assessees and customers purchasing vehicle on availing loan from them. The Standing Counsel pointed out that pursuant to interim order of this Court dated 30th November,2009, though notices were issued to some of the respondents, they declined to furnish details. We do not think, there is any need to call for details from them, because this Court had occasion to consider the factual position in the case of motor vehicle financiers in another batch cases decided vide judgment of this Court m Commissioner of Income Tax v Kerala State Financial Enterprises Ltd. (220 CTR 286). It is seen from the said judgment that this Court this examined the true nature of the hire purchase agreement, lease agreement etc. between the financiers and the vehicle owners and noticed that the transaction is a real loan transaction against security of the vehicle and what is done is endorsement of hypothecation in the R. C. Book in terms of Section 51 of the Kerala Motor-Vehicles Act, 1988. If the facts found in that judgment are applied to the respondents herein in these cases, then the respondents are not entitled to depreciation under Section 32 of the Income Tax Act, 1961 (for short ‘the Act) because they were neither owners of the vehicle nor” ha they used the vehicle in their business or profession.
HELD
Keeping in mind the factual position which is not the same as projected before the lower authorities even including the assessing authority, the assesees’ counsel submitted before us that “the owner” takes in not only the registered owner, but the person in whose favour hypothecation agreement is entered into. We are unable to accept this contention because the definition ‘owner’ as contained in Section 2 (30) of the Motor Vehicles Act, 1988 (for short ‘the Act’) is as follows.-
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