Car registered in the name of another person – ITAT, Mumbai disallowed the claim of depreciation
ITAT in the case of Sadhana Nayyar vs. Income Tax Officer, Mumbai (ITA No. 1310/MUM/2024) has addressed a pivotal issue of depreciation.
The issue was Can depreciation under Section 32 of the Income Tax Act, 1961, be claimed on a car registered in another person’s name?
Let us have a Short Overview of the issue and observation by the ITAT:
1. Ownership of the Asset: The tribunal emphasized that legal ownership isn’t the sole factor! Since the car was financed by the assessee’s business, she was considered its owner.
Cited cases: Mysore Minerals Ltd. v. CIT, Podar Cement Pvt. Ltd.
2. Proving Business Use: The assessee couldn’t demonstrate the car’s business use (e.g., no logbook, travel records). ITAT ruled that motor expenses alone don’t suffice as proof.
3. Responsibility of Documentation: The burden was on the assessee to link the car’s use to business activities. The lack of evidence (such as an agreement with her husband for business use) weakened her case.
4. Distinguishing Precedents: Unlike similar cases where depreciation was allowed, this time the absence of business-use proof led to a different outcome.
Without evidence of business use, the ITAT denied depreciation under Section 32. The ruling favored the Revenue.
The copy of the Appellate as under:
