Registration of vehicle, held, not conclusive proof as to ownership of legal title to vehicle

ICDS Ltd. v. CIT, (2013) 3 SCC 541
 Income Tax 
 Depreciation 
 Movable assets/property - Lease of - Entitlement to claim depreciation on leased movable assets by lessor -
Registration of movable assets and ownership thereof - Relevance of statutory regime applicable to assets in question -
AY 1998-1999 - Depreciation on leased vehicles for hire - Trucks financed and leased by assessee, non-banking finance
company (NBFC) but registered in name of lessees for purposes of MV Act, 1988 - Entitlement of NBFC lessor
(assessee) to claim depreciation on such leased vehicles - Held, as long as ownership lies with assessee and asset is
utilised for purpose of business of assessee, assessee is entitled to claim depreciation - Assessee NBFC engaged in
business of hire purchase and leasing, purchased trucks and leased them to customers on hire, and claimed

depreciation on additions made to said vehicles - Revenue refused claim of depreciation holding that assessee did not
fulfil twin requirement of ownership and usage for business under S. 32 of 1961 Act since assessee is neither owner of
vehicles nor used said vehicles in the course of its business - Tenability - Held, usage of asset itself by assessee is not
mandatory as long as asset is utilised for purpose of business of assessee - In present case, assessee being in business
of purchasing and leasing of trucks, income so obtained would be income in the course of business - Further held,
registration of vehicles in the name of lessees under MV Act, 1988 does not deny ownership of assessee since
registration of vehicle in favour of lessee is only for purpose of MV Act, 1988 - Further, clauses in lease agreement
stipulate that NBFC lessor (assessee) is sole and exclusive owner of said vehicles at all points of time and that at the
conclusion of lease period, lessee was to return the vehicle to assessee, indicating that assessee is owner of said
vehicles - Furthermore, lessees did not claim depreciation on said vehicles - Also, entire lease rent received by NBFC
lessor (assessee) is assessed as business income and entire lease rent paid by lessee has been treated as deductible
revenue expenditure in the hands of lessee affirming that assessee is owner of vehicles as per S. 32 - Hence, held,
assessee satisfied both requirements of S. 32 and thus entitled to claim depreciation in respect of additions made to
trucks which were leased out, (2013) 3 SCC 541-A 
 Income Tax 
 Depreciation 
 Entitlement to - Purposes of business - Use of the asset by assessee itself, mandatoriness of, if any - Held, usage of
asset itself by assessee is not mandatory as long as said asset is utilised for purpose of business of assessee - Thus,
income obtained by lessor assessee from leasing of vehicles would be business income derived in the course of
business of lessor assessee and lessor assessee can claim depreciation on leased vehicles, (2013) 3 SCC 541-B 
 Motor Vehicles 
 Motor Vehicles Act, 1988 
 Ss. 2(30) and 51(4) & (5) - Ownership of vehicle - Registration of vehicle, held, not conclusive proof as to ownership of
legal title to vehicle - S. 2(30) creates legal fiction of ownership in favour of lessee only for purpose of 1988 Act, but not
for purpose of law in general, (2013) 3 SCC 541-C 
 Contract and Specific Relief 
 Specific Contracts 
 Sale of Goods Act, 1930 - Ss. 19 and 14 - Legal title of movable property - Ownership - Held, general statement of law
on ownership may be contained in Sale of Goods Act, 1930, (2013) 3 SCC 541-D 
 Income Tax 
 Income Tax Act, 1961 
 S. 32(1) 2nd proviso - CBDT Circular No. 652 dt. 14-6-1993 - Depreciation at higher rate - Leasing of vehicles on hire
for purposes of business - Tribunal's view that assessee is entitled for higher rate of depreciation since it leased vehicles
in course of business, affirmed, (2013) 3 SCC 541-E 

 S. 32 - Depreciation - Meaning - Held, depreciation is the monetary equivalent of wear and tear suffered by a capital
asset that is set aside to facilitate its replacement when said asset becomes dysfunctional - For a successful claim under
S. 32, twin requirement of ownership and usage for business are essential, (2013)

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