2007 (7) TMI 668 - AT - Income Tax

Summary

Issues involved: Grant of depreciation on vehicles used in business at 20% instead of 40%.

Summary:
The appellant contested the depreciation rate granted by the CIT(A) at 20% instead of 40% on vehicles used in business. The appellant cited a previous Tribunal order in AY 1997-98 where depreciation was allowed at 40%. The CIT(A) based the 20% rate on the AY 1997-98 decision, which was later challenged and overturned by the Tribunal in favor of 40% depreciation. The Departmental Representative argued for a different interpretation based on a Supreme Court judgment regarding lease agreements, suggesting the lessee should be treated as the owner for depreciation purposes. However, the appellant's counsel argued that the Supreme Court judgment was not applicable in this context. The Tribunal examined the facts and clarified that the Supreme Court judgment did not address depreciation issues but focused on ownership disputes in a lease agreement. The Tribunal ruled in favor of the appellant, directing the AO to grant depreciation at 40%.

This judgment highlights the importance of interpreting legal precedents in the correct context and not extrapolating them beyond their intended scope. The Tribunal's decision reaffirmed the appellant's entitlement to 40% depreciation on vehicles used in business, overturning the CIT(A)'s initial ruling based on a misapplied legal argument.