1995 (5) TMI 93 - AT - Income Tax

Summary

Issues:
- Interpretation of the term 'road transport vehicle' under section 32AB of the Income-tax Act, 1961.
- Applicability of the Motor Vehicles Act in defining 'road transport vehicle'.
- Allowability of deduction for the purchase of a motor car under section 32AB.

Analysis:
The appeal before the Appellate Tribunal ITAT Pune challenged the order of the CIT (Appeals) regarding the deduction claimed under section 32AB of the Income-tax Act for the assessment year 1988-89. The main contention was whether a motor car could be considered a 'plant' and not a 'road transport vehicle' for the purpose of claiming the deduction. The Assessing Officer denied the deduction based on the classification of a car as a 'road transport vehicle'. However, the CIT (Appeals) allowed the deduction by adopting the definition of 'road transport vehicle' from the Motor Vehicles Act, which excludes cars from the definition. This led to the revenue appealing against the decision.

The departmental representative argued that the popular usage of the term 'road transport vehicle' includes motor cars, citing various court decisions to support this interpretation. On the other hand, the counsel for the assessee contended that the Motor Vehicles Act should be the source for defining 'road transport vehicle' since the Income-tax Act lacks a specific definition. The counsel relied on relevant definitions from the Motor Vehicles Act to assert that a motor car does not fall under the category of 'road transport vehicle'.

After careful consideration, the Tribunal observed that the term 'motor car' is considered a 'plant' under section 43(3) of the Income-tax Act and that the assessee, a professional Chartered Accountant, had claimed the deduction. The crucial issue was whether a motor car could be excluded from the deduction under section 32AB as a 'road transport vehicle'. The Tribunal analyzed various court judgments and concluded that a motor car should be classified as a 'road transport vehicle', making any amount spent on its purchase ineligible for deduction under section 32AB.

The Tribunal emphasized that in the absence of a specific definition in the Income-tax Act, the term 'road transport vehicle' should be interpreted in its popular sense. The Tribunal rejected the reliance on the Motor Vehicles Act for defining 'road transport vehicle' and highlighted that the Act's definition of 'transport vehicle' did not align with the term used in section 32AB(4)(c). Ultimately, the Tribunal held that a motor car falls within the scope of 'road transport vehicle' under section 32AB, leading to the disallowance of the deduction claimed for the purchase of a car. Consequently, the appeal by the department was allowed, overturning the decision of the CIT (Appeals).