PKF Finance Ltd 158/2002 dated 13-05-2013
Supreme Court decision in case of ICDS Ltd. vs. CIT 2013 3 SCC 541 followed:
Quoting the apex court:
the Hon'ble Supreme Court has examined the question as to whether the assessee is owner of the vehicle, which are leased out and is entitled to depreciation on the vehicles leased out by him on the ground that they were hired out to customers. It was held after examining the definition of 'Owner' given in the Motor
Vehicle Act, 1988 that the assessee is owner of the vehicle and that the assessee did use the trucks in business. The assessee satisfied the condition that it must use the asset for the purposes 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 would stand satisfied.
The Supreme Court held to the following effect.
“15. We would like to dispose of the second contention before considering the first. Revenue argued that since the lessees were actually using the vehicles, they were the ones entitled to claim depreciation, and not the assessee. We are not persuaded to agree with the argument. The Section requires that the assessee must use the asset for the purposes 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.In the present case before us, the assessee is a leasing company which leases out trucks that it purchases. Therefore, on a combined reading of Section 2(13) and Section 2(24) of the Act, the income derived from leasing of the trucks would be business income, or income derived in the course of business, and has been so assessed. Hence, it fulfills the aforesaid second requirement of Section 32 of the Act viz. that the asset must be used in the course of business.
Supreme Court decision in case of ICDS Ltd. vs. CIT 2013 3 SCC 541 followed:
Quoting the apex court:
the Hon'ble Supreme Court has examined the question as to whether the assessee is owner of the vehicle, which are leased out and is entitled to depreciation on the vehicles leased out by him on the ground that they were hired out to customers. It was held after examining the definition of 'Owner' given in the Motor
Vehicle Act, 1988 that the assessee is owner of the vehicle and that the assessee did use the trucks in business. The assessee satisfied the condition that it must use the asset for the purposes 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 would stand satisfied.
The Supreme Court held to the following effect.
“15. We would like to dispose of the second contention before considering the first. Revenue argued that since the lessees were actually using the vehicles, they were the ones entitled to claim depreciation, and not the assessee. We are not persuaded to agree with the argument. The Section requires that the assessee must use the asset for the purposes 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.In the present case before us, the assessee is a leasing company which leases out trucks that it purchases. Therefore, on a combined reading of Section 2(13) and Section 2(24) of the Act, the income derived from leasing of the trucks would be business income, or income derived in the course of business, and has been so assessed. Hence, it fulfills the aforesaid second requirement of Section 32 of the Act viz. that the asset must be used in the course of business.
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