2001-VIL-360-MP-DT

Equivalent Citation: [2001] 249 ITR 720, 169 CTR 351, 120 TAXMANN 201

MADHYA PRADESH HIGH COURT

Date: 11.04.2001

KAILASH CHAND BAGARIA

Vs

COMMISSIONER OF INCOME-TAX AND ANOTHER

BENCH

Judge(s)  : RAJEEV GUPTA., ARUN MISHRA

JUDGMENT

The judgment of the court was delivered by

ARUN MISHRA J.---The present appeal has been filed by the assessee which is a registered firm engaged in the business of manufacturing and trading in limestone. For the assessment year 1992-93, the return was filed. It was subjected to scrutiny and notices under section 143(2)/142(1) were issued. In the return, the assessee had claimed depreciation of Rs. 75,228 at the rate of 40 per cent. on the truck. The Assessing Officer allowed the depreciation at the rate of 25 per cent. only and disallowed the sum claimed on depreciation of Rs. 28,201 on the basis that the truck was used mainly for his own business. Aggrieved by the order of the Assessing Officer, an appeal was preferred before the Commissioner of Income-tax, Jabalpur, assailing the disallowance. The appeal was on the ground that the truck has been used by the appellant by giving it on hire and also used for business purpose. Thus, on the finding that the truck was used for hire as well as for business, depreciation of 40 per cent. was allowed, The Revenue filed an appeal before the Income-tax Appellate Tribunal. The Tribunal has allowed the appeal relying on the decision of this court in the case of Income-tax Commissioner v. Anupchand and Co. [1999] 239 ITR 466. The order dated October 29, 1999, passed by the Tribunal has been assailed in the present appeal on the ground that the depreciation at the rate of 40 per cent. should have been allowed not that of 25 per cent. Entry No. 2(ii) of rule 5 of Appendix I to the Income-tax Rules, 1962, prescribes a rate of depreciation in respect of motor buses, motor lorries and motor taxis used in the business of running them on hire to be 40 per cent. It is also urged in the appeal that the decision of this court in the case of Income-tax Commissioner v. Anupchand and Co. [1999] 239 ITR 466 is not applicable and is distinguishable on the facts.

On the facts it has been found by the Tribunal that the trucks are mainly used for the purpose of the assessee's own business. Therefore, the assessee is not entitled to the higher rate of depreciation, i.e., 40 per cent. and the permissible depreciation is 25 per cent. If the vehicle is used for the assessee's own business, the depreciation at that rate has to be allowed. The Income-tax Appellate Tribunal has restored the order passed by the Assessing Officer and reversed that of the Commissioner of Income tax (Appeals). The entry in question clearly mentions that only in case the vehicle is used for hire, depreciation at the rate of 40 per cent. is permissible to be claimed. In the instant case this finding has not been assailed before us that the truck is used for the assessee's own business. Also the finding recorded by the Income-tax Appellate Tribunal is that the truck is mainly used for the assessee's own business and from the statement filed by the appellant it is clear that mainly the truck is used for the assessee's own business. The decision of this court in the case of Income-tax Commissioner v. Anupchand and Co. [1999] 239 ITR 466 where this court considered the question as under :

"We have to interpret the provisions of entry No. III(ii)E(1A) of Part I of Appendix I appended to the Income-tax Rules, 1962, which reads as under :

'(1A) Motor buses, motor lorries and motor taxis used in a business of running them on hire (N. E. S. A)-40 per cent.'

A plain reading of this provision shows that the assessee is only entitled to a depreciation at the rate of 40 per cent., on vehicles used for business of hire, i.e., if the assessee gives on hire his vehicles for transportation of goods of other persons as a business of transporter, then he is entitled to the benefit of 40 per cent., depreciation allowance, but when ever the vehicles are used for his own business of transporting his goods then he is not entitled to 40 per cent. depreciation allowance and only 30 per cent. depreciation is admissible. Learned counsel invited our attention to a decision of the Rajasthan High Court in the case of CIT v. Sardar Stones [1995] 215 ITR 350, where almost in an identical situation, the asses see was a trader in stones and owned two trucks which were used for transportation of stones from the site of the mines to the depot of the assessee as well as to the customers' premises. The claim of the assessee therein was that the trucks were occasionally used for hiring but to its sister concern when not in use by the assessee. The assessee claimed depreciation at 40 per cent. on the trucks which was allowed by the Income-tax Officer, but subsequently the Commissioner of Income-tax exercising his power under section 263 of the Income-tax Act came to the conclusion that the rate of depreciation at 40 per cent. is allowable only when the assessee was carrying on the business of running trucks on hire, accordingly, the reference was answered by the court in favour of the Revenue and against the assessee. Similar view was taken in another decision of the Rajasthan High Court in the case of CIT v. Manjeet Stone Co. [1991] 190 ITR 183.

The Karnataka High Court has also taken the same view in the case of Veeneer Mills v. CIT [1993] 201 ITR 764, wherein the assessee was a manufacturer of plywood and used to transport the timber which is the raw material in the manufacture of plywood through its own lorries. The dominant purpose of these lorries was the transportation of the material belonging to the assessee in connection with its manufacturing work. However, on some occasions, when the lorries were idle, they were given on hire. In this case, their Lordships observed that the facts speak for themselves. The provision is only attracted in the case of motor buses, motor lorries and motor taxis used in a business of running them on hire. The assessee should be engaged in the business of running the vehicles on hire. Therefore, the question was answered in favour of the Revenue and against the assessee."

The decision of this court in the case of Income-tax Commissioner v. Anupchand and Co. [1999] 239 ITR 466 and the decision of the Rajasthan High Court in the cases of CIT v. Manjeet Stone Co. [1991] 190 ITR 183 and CIT v. Sardar Stones [1995] 215 ITR 350 and that of the Karnataka High Court in the case of Veeneer Mills v. CIT [1993] 2 01 ITR 764 are amply clear as the dominant purpose for which the assessee has used the truck, has been found to be his own business. Thus, in our opinion, he cannot be said to be entitled to depreciation at the rate of 40 per cent. which is allowable only in case the truck is given on hire, which is not the case here.

Thus, in our opinion, no substantial question of law arises in the present appeal. The same is dismissed in limine.

 

 

 

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