Ruling in M/s ICDS Ltd v Commis-sioner of Income Tax, Mysore & Anr, the Supreme Court held that tax depreciation on a finance lease transaction should be available to the lessor, as the lessor qualifies as the owner of the asset and is using the asset for the purpose of business.
The court was ruling on a claim for depreciation under section 32 of the Income Tax Act, 1961, by ICDS, a non-banking financial company that bought and leased vehicles. The vehicles leased were registered in the names of the customers. ICDS had also claimed depreciation at a higher rate on the ground that the vehicles were used in the business of running on hire.
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