1995 (9) TMI 102 - AT - Income Tax

Summary

Issues:
Whether the assessee is entitled to deduction under section 32AB of the Income-tax Act, 1961 for assessment year 1988-89 based on the classification of cars as road transport vehicles.

Analysis:
The primary issue in this appeal was whether the assessee, an individual engaged in the business of jewelry, was eligible for a deduction under section 32AB of the Income-tax Act, 1961 for the assessment year 1988-89. The contention revolved around the classification of cars purchased by the assessee as road transport vehicles. The Assessing Officer disallowed the deduction claimed under section 32AB on the basis that the cars were considered road transport vehicles and hence ineligible for the deduction. The CIT(A) upheld this decision.

The assessee's counsel argued that the cars should not be classified as road transport vehicles as per the Motor Vehicles Act, 1939. The counsel highlighted that the term "road transport vehicle" was not defined under the Income-tax Act, necessitating reference to the Motor Vehicles Act for interpretation. The counsel emphasized that the cars were not public service vehicles or goods vehicles, which are typically considered road transport vehicles under the Motor Vehicles Act.

On the other hand, the Departmental Representative contended that the term "road transport vehicles" should be understood in common parlance as the Income-tax Act did not provide a specific definition. Reference was made to judicial interpretations in similar contexts to argue that cars should not be considered plant and machinery for the purpose of deduction under section 32AB.

The Tribunal analyzed the definitions under both Acts and concluded that since the term "road transport vehicle" was not explicitly defined in either Act, it should be interpreted based on common understanding. The Tribunal reasoned that in common parlance, a motor car qualifies as a road transport vehicle as it transports people and goods on roads. Citing precedents, the Tribunal affirmed that motor cars are considered road transport vehicles for tax purposes.

Ultimately, the Tribunal dismissed the appeal, ruling that the motor cars purchased by the assessee for business use did not meet the criteria for deduction under section 32AB as they were classified as road transport vehicles. The decision was based on a comprehensive analysis of the definitions, precedents, and legislative intent surrounding the classification of vehicles for tax deductions.