9911796707
TMI Blog1985 (2) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation on jeep and car are as under : The assessee, a family trust, is assessed in the status of an AOP. For the year under consideration, the ITO disallowed one-third of the claim on account of car and jeep expenses, inclusive of the driver's salary, on estimate for personal use of the car and jeep by the trust members. Following the same, he invoked the provisions of section 38(2) of the Income-tax Act, 1961 ('the Act') and made a similar disallowance from out of the claim for depreciation on car and jeep. 3. On appeal, it was contended before the Commissioner (Appeals) that no portion of the depreciation was disallowable, in view of the provisions of section 32 of the Act read with rule 5 of the Income-tax Rules, 1962, which provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of a similar proportion of the other expenses incurred on the maintenance of the vehicles. 5. The assessee has filed this appeal before us, being aggrieved with the decision of the Commissioner (Appeals). Shri Dewani, the learned counsel for the assessee, invited our attention to rule 5, which provides for allowance of depreciation on assets used for the purposes of the business at any time during the previous year. He submitted, that even if the asset was used for a single day during the previous year for the purposes of the business, the full claim on account of depreciation was admissible by virtue of this rule and, therefore, no part of it could be disallowed by invoking any other section. He also invited our attention to the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in tea are liable to tax to the extent of 40 per cent under the Income-tax Act, the income from coffee being wholly exempt, whereas, the income from coffee curing, works being wholly taxable. The ITO apportioned the expenditure in the head office as well as the depreciation. The ITO allowed only a proportionate part of the depreciation as part of the income was not taxable to income-tax. On appeal, the Tribunal held that no bifurcation could be made between the user of the assets towards taxable sources of income and non-taxable sources of income and, in any event, as the assets were utilised for earning the taxable income, there was no justification for making a bifurcation and disallowing a portion of the depreciation allowance in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h does not bring in taxable income has also had the benefit of the assets, it does not mean that the assessee cannot get the deduction under this provision ". Elaborating this concept, the Madras High Court, after making a reference to the provisions of section 38(2), finally held as follows : " ...In a case, where the claim would have been allowed on the ground that the expenditure was laid out for purposes of the business, then the circumstance that it is beneficial to a non-business activity is beside the point, and section 38(2) does not apply to such a case. In other words section 38 is applicable only to those cases where the expenditure or allowance relates to a business only in part. It does not apply where the asset is wholly, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income had also had the benefit of the assets, it did not mean that the assessee could not get the deduction under this provision'. In the decided case, it was not the case of the department that the assets were partly used for non-business purposes. That is why the Hon'ble Madras High Court held as follows : " ...In other words, section 38 is applicable only to those cases where the expenditure or allowance relates to a business only in part. It does not apply where the asset is wholly, and not partially, used for the purpose of business. " [Emphasis supplied] 9. Here lies the crux of the problem and the answer to the question at issue in the present case. In the present case, it is the case of the department and it has not been cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on that basis only, a part disallowance of the expenditure had been made by the ITO and acquiesced in by the assessee. The facts in the present case being totally different in this material respect, from those of the decided case, we are of the opinion that the rationale of the Madras High Court decision would not be applicable to the facts of this case. 10. Every decision is only an authority with reference to the facts, on the basis of which, it has been decided. Even if there is a slight factual difference, the decision would not be applicable. In this context, it is very germane to refer to certain observations made by Justice Bhagwati of the Supreme Court in the case of Addl. Distt. Magistrate v. Shivakant Shukla AIR 1976 SC 1207 : ..... X X X X Extracts X X X X X X X X Extracts X X X X
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