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November 2009

Depreciation : User of asset : Assessee in leasing business : Lease of machinery in accounting year : Lessee installing machinery in subsequent year : Not relevant : Assessee entitled to depreciation.

By K. B. Bhujle, Advocate
Reading Time 2 mins

New Page 5

  1. Depreciation : User of asset : Assessee in leasing
    business : Lease of machinery in accounting year : Lessee installing machinery
    in subsequent year : Not relevant : Assessee entitled to depreciation.

[CIT v. Kotak Mahindra Finance Ltd., 317 ITR 236 (Bom.)]

The assessee was in the business of leasing. In the
relevant accounting year the assessee had leased out breakers to TECL. The
lessee installed the breakers in the subsequent year. The Assessing Officer
disallowed the claim for depreciation on the ground that asset was not put to
use in the relevant year. The Tribunal allowed the assessee’e claim.

On appeal by the Revenue, the Bombay High Court upheld the
decision of the Tribunal and held as under :

“(i) The assessee, admittedly had supplied the machinery
before the end of the financial year and the assessee had received the lease
rental for the same. Whether the lessee had put to use the lease equipment
would be irrelevant as long as the machinery in fact had been given on lease
before the end of the financial year, as then it could be said that the
assessee for the purposes of business had ‘used’ the leased equipment.

(ii) The assessee was entitled to depreciation.”

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