2019 (11) TMI 212 - HC - Income Tax

Depreciation @ 30% - buses which were owned by the assessee and were being run on hire - New Appendix I (effective from assessment year 2006-2007 onwards), as per item No.III (3) (ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire - Tribunal rejected revenue appeal - HELD THAT - AO disallowed the depreciation holding that this would be applicable only to such businesses who had taken the buses on hire - Tribunal having dismissed the appeal of the Revenue, it is before us in these appeals. A bare perusal of item No.III (3) (ii) quoted above makes it clear that the interpretation given by the Commissioner and the Tribunal is correct and natural while that sought to be given by the Assessing Officer is most unnatural and really makes the provision un-meaning because then it would imply that an Assessee is using the motor buses/ motor lorries and motor taxies in a business of running. We asked the learned counsel for the appellant what the business of running of buses, lorries and taxies would be? He is not in a position to deny that the business of running buses, lorries and taxies can only be for hire because in every other case such vehicles would be only utilized for use of assessee and not for a business. Thus the natural meaning of the phrase would apply in the present case and those Assessees who are running automobiles for hire would be liable to claim a higher depreciation than those whose automobiles are meant for their use. We are not able to find any fault with the judgment and orders of the Tribunal. No other question of law arises.

Summary

Issues: Interpretation of depreciation provision for motor buses used in hire business

Issue 1: Common questions of law and facts in multiple appeals
The judgment involves four appeals filed under Section 260A of the Income Tax Act, 1961 against the orders of the Income Tax Appellate Tribunal Division Bench Amritsar for different assessment years. The appeals were consolidated for convenience, and the facts were primarily taken from ITA No.101 of 2018.

Issue 2: Disallowance of depreciation for buses used in hire business
The appeals were against the orders of the Tribunal allowing 30% depreciation to the Assessee for buses owned and run on hire. The Assessee claimed depreciation under New Appendix I for motor buses used in the business of running them on hire. However, the Assessing Officer disallowed the depreciation, interpreting the provision to apply only when buses were taken on hire. The Tribunal upheld the Assessee's claim, stating that the natural interpretation of the provision supported allowing higher depreciation for vehicles run for hire compared to those used solely by the assessee.

Analysis:
The judgment addressed the interpretation of the depreciation provision for motor buses used in a hire business. The Assessing Officer's restrictive reading of the provision was rejected in favor of a broader and more natural interpretation supported by the Tribunal. The court emphasized that the phrase "business of running" inherently implied running for hire, as opposed to personal use. This distinction justified the Assessee's claim for higher depreciation, as vehicles used for hire business would have a different commercial purpose and economic impact compared to those used for personal use. The court found no fault with the Tribunal's decision and concluded that no other question of law arose in the case. As a result, the main cases were dismissed, and any pending applications were also disposed of accordingly.