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Issues involved: Interpretation of depreciation rate for vehicles leased out by a Non-Banking Financial Company u/s Income Tax Rules, 1962.
Summary: The High Court of Telangana, following a precedent from the Madras High Court, upheld the Income Tax Appellate Tribunal's decision to allow a Non-Banking Financial Company to claim depreciation at a rate of 40% on vehicles leased out for the Assessment Year 1998-99. The Tribunal found that the company used the vehicles in its leasing business and was entitled to the higher depreciation rate based on the definition of "hire" as per the Income Tax Rules. The Madras High Court's judgment clarified that there is no qualitative difference between leasing a vehicle for a specified period for consideration and letting it on hire for a short duration. Therefore, the Tribunal's decision was deemed valid as the company was leasing out vehicles as part of its business activities. In conclusion, the High Court determined that there was no substantial question of law to be considered in the Revenue's appeal under Section 260-A of the Income Tax Act, 1961. The appeal was dismissed at the admission stage without any costs incurred.
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