9911796707
TMI Blog1964 (9) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... t rebate in respect of a new bus put on the road during the accounting year therefor. The Income-tax Officer refused to grant such relief on the ground that the bus could not be said to have been installed within the meaning of section 10(2)(vib) of the Act. So did the Appellate Assistant Commissioner on appeal but on a different ground, namely, that the assessee was not the owner of the bus to be entitled to such relief. The Appellate Tribunal agreed with the Appellate Assistant Commissioner on the terms of the agreement relied on. This has given occasion to the present reference. It is common ground that the assessee had actually purchased the bus from a Bezwada firm but as he had no money to pay the price he borrowed the amount from a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of any rent due by the hirer to the landlord or in respect of the premises where the hirer is residing or where he is carrying on business or in respect of the premises where the vehicle is garaged or placed at any time. It further provides for the right of the owner to resume the vehicle in case of default in payment of rental or failure to observe the conditions in the agreement. It is significant to note that the agreement provides for the right of purchase of the vehicle by payment of rupee one at the termination of the hiring. This right may be exercised even earlier on payment of the entire hire amounts specified plus one rupee. Clause 21 in this behalf reads thus: The hirer may at any time determine the hiring and be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the terms of the agreement on the facts and circumstances of the case. There it was represented on behalf of the assessee that the assessee had actually purchased the bus from a Bezwada firm but not having the money to pay the purchase price he had borrowed the amount from a Madras party under the agreement dated March 20, 1957. In this situation, it held that the agreement if properly construed only means that having purchased the bus the assessee transferred the ownership to the Madras party in lieu of the finance that was given to him by the Madras party which was to be repaid in easy instalments as stipulated under the said agreement. One significant fact which must needs be mentioned in this connection is that the vehicle stands as eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly required of him then was that he should pay the instalments regularly and the vehicle should stand as a security for the amount. If the assessee paid all the instalments regularly, or the entire amount is paid before time, on payment of a further sum of Re. 1 which was but a nominal sum fixed to give a colour of reality to the agreement actually reduced to writing the assessee was, to all intents and purposes, even under the terms of the agreement, to be the owner. Evidently, the sum so payable is not a hire amount, for the assessee shall be liable to pay the whole amount even though the hire transaction is put an end to earlier. It is manifestly the amount borrowed which ought to be paid back in instalments or if the assessee so chose i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reduced to writing de hors the facts and circumstances of the case, to which a reference has already been made, have to determine the nature of the transaction the agreement dated March 20, 1957, is a hire purchase agreement whereunder the so-called hirer automatically assumes the status of a fullfledged owner on payment of the amounts due plus a nominal sum of Re. 1. Even so, the so-called hire-purchase agreement will be an agreement of sale rather sale itself with facility of paying the purchase amount in instalments on the security of the bus. In either case, the assessee must be deemed to be the owner and he is entitled to the development rebate under section 10(2)(vib). The question referred to, therefore, is answered in the affirmat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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