Description:
Assets Acquired on Hire Purchase Basis –– Whether Depreciation Allowable–– P.Varadraj.
Majority of judgments are in favour of the view that the depreciation is allowable in respect of assets acquired on hire purchase basis.
The Apex Court in Mysore Minerals Ltd. v. CIT (1999) 239 ITR 775 (SC)
In the case of hire purchase the person who has taken the assets on hire purchase basis has the possession and the uses the assets for the purposes of his business or profession. Further as long as the hirer discharges his obligation, he has an uninterrupted right over the assets and the person giving the asset on hire purchase basis is eventfully to lose all rights, title and interest in them.
Therefore, so long as the hirer has possession of asset, he is discharging his obligation, he only is entitled to depreciation
Source:
1. www.tpcc.in
2. The Tax Referencer .Volume121. Issue No.6, 10.Oct, 2011, Page No.40.
Our Comment:
Depreciation allowable on assets acquired on Hire Purchase basis since, the hirer has uninterrupted right over the assets as long he fulfils his obligations of Hire Purchase Agreement.
