Case Law Details
It is an undisputed fact that the income from lease has been considered by Assessee as income. It is also an undisputed fact that the AO has considered the lease entered by the Assessee to be a Finance lease to arrive at the conclusion that the assessee is not entitled to depreciation. On identical facts, in the Assessee’s own case for AY 2002-03 (in ITA No. 2572/Ahd/2006 order dated 25.09.2006 the issue has been decided in favor of Assessee by holding as under:
25. We have heard the rival submissions and perused the material on record. It is an undisputed fact that the income from lease has been considered by Assessee as income it is an undisputed fact that the A.O. has considered the lease entered by the Assessee to be a Finance lease to arrive at the conclusion that the Assessee is not entitled to depreciation. We find that the issue of depreciation on leased assets has been decided by Honorable Apex Court in the case of ICDS Ltd (supra). One of the question before the Hon. Supreme Court was “whether the Assessee is entitled to depreciation vehicles finance by it which is neither owned nor used by the Assessee by virtue of the business” the Hon. Supreme Court held as under:
“The provision on depreciation in the Income-tax Act, 1961, reads that the asset must be “owned, wholly or partly, by the assessee and used for the purposes of the business”. Therefore, it imposes a twin requirement of “ownership” and “usage for business” for a successful claim under section 32 of the Act.
The section requires that the assessee must use the asset for the “purpose, of business”. It does not mandate usage of the asset by the assessee itself. As long as the asset is utilized for the purpose of business of the assessee, the requirement of section 32 will stand satisfied, notwithstanding non-usage of the asset itself by the assessee.
The definitions of “ownership” essentially make ownership a function of legal right or title against the rest of the world. However, it is “nomen genera¬lissimum”, and its meaning is to be gathered from the connection in which it is used, and from the subject-matter to which it is applied. As long as the assessee has a right to retain the legal title against the rest of the world, it would be the owner of the asset in the eyes of law.
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