Depreciation claim in respect of leased asset, when used by the lessee after the end of the year

In CIT v. Kotak Mahindra Finance Ltd., (2009) 23 DTR (Bom) 299 the assessee engaged in the business of leasing, purchased breakers from ABB Ltd., and leased the same to Tata Electric Company Ltd. The assessee claimed depreciation though it was installed and used by the lessee after the end of the year. The admissibility of depreciation in the hands of lessor was the subject matter of dispute before the court. The court followed the apex court decision in the case of Mcorp Global (P) Ltd., v. CIT (2009)19 DTR (SC) 153 and held that the assessee (lessor) is eligible for depreciation notwithstanding the lessee had actually used the asset after the end of the year. The apex court held in Mcorp Global’s case (supra) held that the aspect of the actual use of machinery by the lessee was irrelevant so far as the allowance of depreciation in the hands of the owner – lessor is concerned. Since the machineries were given on lease before the end of the financial year, for the lessor it should be taken as usage of asset for business viz. leasing.