1991 (4) TMI 210 - AT - Income Tax

Summary

Issues:
- Dispute over depreciation rate allowed by Dy. Commissioner(Appeals) at 40% on motor vehicles used for transport business for assessment year 1980-81.
- Interpretation of Income-tax (Fifth Amendment) Rules, 1980 regarding depreciation rate increase.
- Conflict between Special Bench decision in Rajapalayam Mills Ltd. case and Third Member decision in Davinder Arora case.

Analysis:
1. The appeal involved a dispute regarding the depreciation rate allowed by the Dy. Commissioner(Appeals) at 40% on buses and lorries used by the assessee in her transport business for the assessment year 1980-81. The assessee relied on the Income-tax (Fifth Amendment) Rules, 1980, which increased the depreciation rate to 40% for motor vehicles used in transport business. The Revenue objected, claiming the 40% rate came into effect from the assessment year 1981-82 onwards, not for the year under appeal.

2. The Revenue contended that the Special Bench decision in Rajapalayam Mills Ltd. case supported their position, while the assessee submitted a written plea through her Accountant for a merit-based decision. The recent decision of the Third Member in the case of ITO v. Davinder Arora was also discussed, with the Revenue arguing it did not assist the assessee's case.

3. The Tribunal carefully considered the submissions and found the decision of the Third Member in Davinder Arora's case directly relevant to the issue at hand. The Tribunal rejected the Revenue's contention of a conflict between the Special Bench decision and the Third Member decision, citing a detailed analysis of the Notification dates and the intent behind the different depreciation rates set by the Government.

4. The Tribunal concluded that the decision in Davinder Arora's case aligned with the view expressed by the Special Bench in Rajapalayam Mills Ltd. case. The Tribunal emphasized that the issue in the present case pertained to the Income-tax (Fifth Amendment) Rules, 1980, and not the Fourth Amendment Rules, 1983 as in the Special Bench decision. Therefore, the Tribunal upheld the Dy. Commissioner(Appeals)'s decision to allow depreciation at 40% for the year under appeal, dismissing the Revenue's appeal.