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Issues:
- Interpretation of depreciation rates for vehicles used in business. - Application of law regarding depreciation rates for vehicles used for hire. - Consideration of evidence by the Tribunal in deciding depreciation rates. Interpretation of Depreciation Rates: The case involved applications under section 256(2) of the Income-tax Act, 1961, concerning the assessment years 1981-82 and 1983-84. The primary question raised was whether the Tribunal was justified in confirming the order allowing depreciation at 40% for a truck used by an individual in the explosives business, as opposed to the 30% allowed by the Income-tax Officer. The Commissioner held in favor of the assessee, stating that depreciation should be allowed at 40% because the vehicle was used for both personal business and hire purposes. The Department argued that the decision in a previous case, CIT v. Manjeet Stone Co., which was reversed, should impact the current decision, leading to depreciation at 30%. The court analyzed the relevant entries in the depreciation table and previous case law to determine the correct depreciation rate. Application of Law on Depreciation Rates for Hire Vehicles: The court referred to the depreciation table in the Income-tax Rules, distinguishing between vehicles used for personal business and those used for hire. It was highlighted that vehicles used for hire are entitled to a higher depreciation rate of 40%, while those used solely for personal business are eligible for 30% depreciation. The court emphasized that the key factor is whether the vehicle is used in the business of running them on hire. The judgment in CIT v. Manjeet Stone Co. established that mere registration as a public carrier does not automatically qualify a vehicle for the higher depreciation rate. The court stressed the importance of evidence showing the vehicle's use for transportation business on hire by others. It was clarified that the Tribunal must consider the facts and circumstances of each case based on the evidence available, without conducting a fresh appraisal of evidence. Consideration of Evidence by the Tribunal: The court observed that the Tribunal did not adequately discuss the evidence in the case but relied on its findings in a previous judgment. As a result, the Tribunal did not apply its mind to the specific facts and circumstances of the case. The court directed the Tribunal to reconsider the matter, taking into account the law laid down in previous judgments and all relevant evidence on record. While the court could not instruct the Tribunal to refer the question to the High Court, it left the decision open for the Tribunal to rehear the appeal and make a decision in accordance with the law.
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