FCS Deepak Pratap Singh
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Dear Friends, We are starting a series of questions and their answers on Income Tax Matters, for information and knowledge of our readers and students. This would be helpful for those aspiring students of our profession. Lets us consider the first question related to the right to claim depreci
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FAQ :
To claim depreciation under Section 32 of the Income Tax Act, 1961, the asset must be owned, wholly or partly, by the assessee claiming the depreciation.
The Motor Vehicles Act, 1988, mandates that during the lease period, a leased motor vehicle must be registered in the name of the lessee, not the lessor.
Yes, a leasing company can claim depreciation on leased vehicles even if they are registered in the lessee's name, based on a Supreme Court ruling, provided the lessee does not claim depreciation.
The leasing company can claim depreciation if the lessee treats the lease rent as a deductible revenue expenditure under Section 37 of the Income Tax Act and does not claim depreciation on the vehicles themselves.
The Supreme Court ruled in favour of the leasing company based on the argument that the Motor Vehicles Act requires registration in the lessee's name, and if the lessee were the true owner, they would have claimed depreciation, which they did not.
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