1993 (3) TMI 159 - AT - Income Tax

Summary

Issues:
1. Jurisdiction of Commissioner to revise assessment order under section 263 of the Income-tax Act.
2. Applicability of depreciation rate on DLY/DLZ cars, coaches, and pick-up vans.
3. Interpretation of statutory provisions and circulars related to depreciation on imported cars used for hire purposes.

Detailed Analysis:
Issue 1: The appeal challenges the revisionary order of the Commissioner of Income-tax dated 23-3-1989, questioning the jurisdiction of the Commissioner to initiate proceedings under section 263 when the matter was already subject to appeal before the Commissioner of Income-tax (Appeals). The assessee argues that the Commissioner erred in setting aside the assessment made under section 143(3) and directing the Assessing Officer to reframe it. The Tribunal considered the merits of the case and found a prima facie case in favor of the assessee, indicating that the revisionary order may lack jurisdiction. The Tribunal also noted that the Central Board of Direct Taxes circular supported the assessee's position on depreciation for cars used for hire purposes.

Issue 2: The dispute revolves around the applicable rate of depreciation for DLY/DLZ cars, coaches, and pick-up vans. The assessee contends that the applicable rate should be 40%, as per the Income-tax Rules and the Central Board of Direct Taxes circular. The Tribunal reviewed the facts and found that the cars and coaches were used for hire purposes, supporting the claim for a higher depreciation rate of 40%. However, regarding pick-up vans, the purpose was unclear, leading the Tribunal to remit the issue to the Assessing Officer for further clarification.

Issue 3: The interpretation of statutory provisions and circulars related to depreciation on imported cars used for hire purposes was crucial in this case. The Tribunal analyzed the provisions of section 32(1)(ii) and the Central Board of Direct Taxes circular, which clarified that depreciation should be allowed for foreign motor cars used for providing transportation services to tourists. The Tribunal emphasized that the legislative intent was to discourage the use of foreign cars for business but made exceptions for cars used for hire to tourists. The Tribunal found that the assessee's claim for depreciation on cars and coaches used for hire to be valid based on the statutory provisions and circulars.

In conclusion, the Tribunal set aside the revisionary order and partially allowed the appeal of the assessee, granting a higher rate of depreciation for DLY/DLZ cars and coaches used for hire purposes while remitting the issue of pick-up vans for further assessment by the Assessing Officer.