2003 (9) TMI 63 - HC - Income Tax

Investment allowance - expression road transport vehicles - 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the tractor was not a road transport vehicle? - 2. Whether the Tribunal was legally correct in directing the Inspecting Assistant Commissioner of Income-tax (Asst.) that the investment allowance should be allowed to the assessee according to the provisions of section 32A? - In our opinion the words road transport vehicle as used in common parlance refer to buses, trucks, taxis, etc., but would certainly not include tractors. - For the reasons given above, the question referred to us is answered in the affirmative, that is in favour of the assessee and against the Department.

Summary

Issues Involved:
1. Whether the Tribunal was right in holding that the tractor was not a road transport vehicle?
2. Whether the Tribunal was legally correct in directing the Inspecting Assistant Commissioner of Income-tax that the investment allowance should be allowed to the assessee according to the provisions of section 32A?

Analysis:
Issue 1: The first issue raised in this case was whether the tractor in question could be considered a road transport vehicle for the purpose of claiming investment allowance. The assessee, a U.P. Government undertaking, provided tractors on hire which were fitted with trolleys and exclusively used for hiring purposes. The dispute arose when the Inspecting Assistant Commissioner denied the investment allowance, considering the tractor as a transport vehicle. However, the Tribunal ruled in favor of the assessee, stating that the tractors were not road transport vehicles. The court analyzed the definition of "tractor" under the Motor Vehicles Act, emphasizing that tractors are primarily used for agricultural purposes and not for transporting goods or passengers on roads. The court relied on common parlance interpretation and previous legal precedents to support its decision, ultimately ruling in favor of the assessee.

Issue 2: The second issue pertained to the legality of directing the Inspecting Assistant Commissioner to allow the investment allowance under section 32A to the assessee. The court noted the provision in section 32A(1) which excludes deduction for road transport vehicles. By determining that the tractors in question were not road transport vehicles, the court upheld the Tribunal's decision to allow the investment allowance to the assessee. The court emphasized the importance of interpreting words based on their popular or commonsense meaning in the absence of a statutory definition. Citing legal precedents, the court concluded that tractors should not be considered road transport vehicles in common parlance, thereby supporting the Tribunal's decision to grant the investment allowance to the assessee.

In conclusion, the High Court of Allahabad ruled in favor of the assessee on both issues, holding that the tractors provided on hire were not road transport vehicles and that the investment allowance should be allowed to the assessee according to the provisions of section 32A. The court's decision was based on a thorough analysis of the relevant legal provisions, common parlance interpretation, and established legal principles.