2003 (4) TMI 80 - HC - Income Tax

Depreciation - The Tribunal has held in the impugned order that the assessee has failed to establish hiring business and the Commissioner of Income-tax (Appeals) had allowed the claim of the assessee without satisfying the conditions thereof. - Learned counsel for the appellant urged that the Tribunal omitted to consider the facts. - Tribunal has held the cylinders were not purchased for leasing business and one of the parties to whom the cylinders were leased out is the manufacturer and seller of the cylinders. To the other party cylinders were dispatched only a day before the close of the accounting period. The findings in the order of the Tribunal are finding of facts and hence we cannot interfere in this appeal.

Summary

Issues:
1. Challenge to the impugned order of the Income-tax Appellate Tribunal regarding depreciation claim on gas cylinders.
2. Interpretation of conditions for granting depreciation on assets.
3. Consideration of whether letting out assets for hire constitutes actual use for depreciation claim.
4. Application of legal precedent in determining hiring business establishment.

Analysis:
1. The case involved an income-tax appeal challenging the order of the Income-tax Appellate Tribunal regarding the depreciation claim on gas cylinders purchased by the assessee-company for Rs. 39,44,650 during the assessment year 1986-87. The Assessing Officer initially rejected the claim for depreciation, stating that the cylinders were not put to use during the accounting period ending on September 30, 1985.

2. The Commissioner of Income-tax (Appeals) reversed the Assessing Officer's decision, holding that the cylinders were dispatched to two parties before the close of the relevant accounting year, and the rental income earned from the parties was credited to the profit and loss account. The Commissioner concluded that all conditions for granting depreciation on the cylinders were satisfied as they were put to use in the business of hiring/letting out.

3. The Department appealed to the Tribunal, arguing that letting out the cylinders for hire was not sufficient to establish actual use for depreciation claim, especially since the assessee's primary business was not letting out gas cylinders on hire. The Tribunal agreed with the Department, stating that the assessee failed to establish a hiring business, and the conditions for depreciation claim were not met.

4. The Tribunal distinguished a previous Supreme Court decision cited by the appellant, emphasizing that in the present case, the assessee did not prove a hiring business. The Tribunal's findings, including the fact that one of the parties to whom the cylinders were leased out was the manufacturer and seller of the cylinders, were considered as findings of facts, and the court could not interfere in the appeal. The appeal was ultimately rejected based on these considerations.