Vehicle Commercially Used For Purpose Of Business Of Company, Eligible For Benefit Of Depreciation : Ahmedabad ITAT
Pankaj Bajpai
29 March 2024 3:36 AM GMT
Relying on the decision of the Jurisdictional High Court in the case of PCIT vs. Asian Mills (P.) Ltd., the Ahmedabad ITAT that vehicle exclusively used by an entity for its commercial purpose becomes eligible for claim of depreciation. The Bench of Waseem Ahmed (Accountant Member) and Madhumita Roy (Judicial Member) observed that “car is commercially used for the purpose...
Relying on the decision of the Jurisdictional High Court in the case of PCIT vs. Asian Mills (P.) Ltd., the Ahmedabad ITAT that vehicle exclusively used by an entity for its commercial purpose becomes eligible for claim of depreciation.
The Bench of Waseem Ahmed (Accountant Member) and Madhumita Roy (Judicial Member) observed that “car is commercially used for the purpose of business of the company and the depreciation thereon cannot be denied; moreso, the interest on car loan and car insurance was allowed by the department”. (Para 10)
As per the brief facts of the case, the appellant has claimed depreciation on vehicle being Audi Q7, purchased in the name of Devkinandan Gopiram Agarwal being the Director of the assessee company. While adjudicating the issue so as to ascertain whether the car was put to use for the business of the company, the assessee was requested to furnish explanation with the copy of log book whereupon it was replied that the car is being used by the Company which is reflected in the books of the company.
The issue was finalized based on the fact that the Car was purchased in the name of the Director and not in the name of the company and since not fulfilled the condition required for claim of depreciation, and further that, as assessee failed to show the car was used exclusively for the business purposes by supporting documents, the depreciation @15% claim amounting to Rs.11,75,823/- has been disallowed.
The Bench referred to the judgment passed by the Jurisdictional High Court in the case of PCIT vs. Asian Mills (P.) Ltd., wherein the assessee was denied depreciation and other expenses on car claimed by the appellant on the ground that Car was purchased and owned in the name of Directors and hence, the asset could not be said to be of the company.
The Bench also accepted the fact that the purchase of a car was made by the appellant company which is also reflected in the books of account of the appellant company.
Hence, the ITAT allowed the assessee's appeal.
Counsel for Appellant/ Assessee: Vihar Soni
Counsel for Respondent/ Revenue: Vipul Chavda
Case Details: Mukesh Trends Lifestyle Limited verses Dy CIT
Case Number: ITA. No. 828/Ahd/2023
