1986-VIL-78-ITAT-

Equivalent Citation: ITD 017, 1014, TTJ 024, 303,

Income Tax Appellate Tribunal MADRAS

Date: 15.01.1986

INCOME-TAX OFFICER

Vs

SAROJINI TRANSPORTS (P.) LTD.

BENCH

Member(s)  : M. R. SIKKA., GEORGE CHERIYAN.

JUDGMENT

Per Shri George Cheriyan, Accountant Member---This appeal by the revenue relates to the assessment year 1981-82. The assessment order states that 'the assessee, a private limited company, carries on business of plying transport buses'. The ITO has observed that the assessee had claimed depreciation at 40 per cent on buses. The ITO stated that depreciation at this rate can be allowed only on buses which were let on hire. Since the assessee cannot be said to be carrying on business of letting the buses on hire, according to the ITO, only 30 per cent depreciation could be granted. The assessee appealed and submitted before the Commissioner (Appeals) that depreciation should have been allowed at 40 per cent. The Commissioner (Appeals) was of the view that when a bus is registered and operated as a public carrier, as distinguished from private carrier then it has to be considered that the bus was let out on hire. He, therefore, allowed the appeal.

2. The revenue is aggrieved. The submission of the learned departmental representative is that 40 per cent is admissible only if the whole bus was hired out. The present is not such a case. If people took single tickets and travelled in the bus, according to the learned departmental representative, it could not be said that they were hiring out a bus.

3. The submission of the learned counsel was that with reference to the various provisions of the Motor Vehicles Act, 1939, it was clear that in the present case on the facts the assessee carried on the business of plying buses on hire and was, thus, entitled to depreciation at 40 per cent. It was also submitted that the Tribunal in IT Appeal No. 787 (Mad.) of 1984, dated 16-11-1984 had in essence taken a similar view. That was a case arising under the provisions of section 154 of the Income-tax Act, 1961 ('the Act'), and according to the learned counsel, the Tribunal had held that where depreciation was originally granted at 40 per cent in a business of this type, there was no mistake apparent from records, which would merit reduction of the same to 30 per cent.

4. In terms of the depreciation table in Appendix I, Part I of the Income-tax Rules, 1962, under item (III) D(9), depreciation at 30 per cent is admissible on 'motor buses, and motor lorries other than those used in a business of running them on hire'. Depreciation at 40 per cent is admissible in item (III) D-1A on 'motor buses, motor lorries and motor taxies used in a business of running them on hire'. The question that arises is whether the motor buses in the present case were used in a business of running them on hire. The assessment year involved is 1981-82. We have looked into the records to ascertain the nature of the receipts in the case of the assessee. We find that they are by way of collection by plying the buses on various routes. The Depreciation Schedule also shows that depreciation at 40 per cent was claimed on four buses, viz., TNC-7149, TNB-7434, TNG-7070 and MDS-8928. It is, therefore, clear that the assessee was receiving income from plying buses on specified routes---city as well as moffussil. The question is whether the motor buses were used in the business of running them on hire. Section 2(25) of the Motor Vehicles Act defines 'public service vehicle' as below:

" 'public service vehicle' means any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a motor cab, contract carriage, and stage carriage;"

'Contract carriage' is defined in section 2(3) as under:

" 'contract carriage' means a motor vehicle which carries a passenger or passengers for hire or reward under a contract expressed or implied for the use of the vehicle as a whole at or for a fixed or agreed rate or sum and from one point to another without stopping to pick up or set down along the line of route passengers not included in the contract; and includes a motor cab notwithstanding that the passengers may pay separate fares;"

'Stage carriage' is defined in section 2(29) as under:

" 'stage carriage' means a motor vehicle carrying or adapted to carry more than six persons excluding the driver which carries passengers for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey."

Buses which are plying between different points and which carry passengers are public service vehicles and, therefore, in terms of the definition they carry passengers for hire or reward. When an assessee runs motor buses on several routes and receives amounts by way of collection regularly, it clearly tantamounts to the business of running buses on hire. We are unable to subscribe to the view canvassed for by the learned departmental representative that unless a single person takes an entire bus on hire it would not amount to the business of running buses on hire merely because separate fares happen to be collected from different passengers. As a matter of fact, the fundamental rules of Government have recognised the plying of public conveyance regularly for hire between fixed points and the taking of single seats therein for claiming mileage allowance. Government servants were required at one time to furnish a certificate for claiming higher mileage allowance, the relevant portion of which reads as below:

"Certified that I did not perform the journeys for which mileage allowance is claimed at the higher rates prescribed in S.R. 46 by taking a single seat in any public conveyance (excluding steamer) which plied regularly for hire between fixed points and charges fixed rates."

In our view, the terms of the certificate provide complete answer to the contention of the revenue. The buses ply regularly for hire between fixed points and charge fixed rates. The passenger who takes a single seat pays the rate prescribed for the ticket which entitles him to have a single seat in the bus which is plying for hire. The result is that for reasons elaborated upon from that stated by the Commissioner (Appeals) the assessee is entitled to depreciation at 40 per cent on the buses in question.

5. In the result, the appeal of the revenue is dismissed.

 

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