1999 (11) TMI 31

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..... Government in the contract work and in that view confirming the estimate of income on the value of materials as determined by the Commissioner of Income-tax (Appeals) ? 2. Whether, on the facts and in the circumstances of the case and on a proper construction of section 38 of the Income-tax Act, 1961, and rule 5 of the Income-tax Rules, 1962, the Appellate Tribunal was justified in disallowing 25 per cent. of the depreciation on the car on the ground of the use of the car by the partners and members of their families for their personal work ?" We have heard Sri Rajesh Kumar, learned counsel for the assessee, and Sri Shambu Chopra, learned standing counsel for the Commissioner As regards question No. 1, the relevant facts are that th .....

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..... payments received by the appellant from the Government exclusive of the cost of the materials received for being used, fixed or incorporated in the works. The Tribunal has said that the facts of that case were different inasmuch as in the case of the present assessee the property in the materials so supplied had vested in the assessee-contractor. This, in our view, could not change the legal principle. Whether the property in the books remained with the contractee or passed on to the contractor cannot result in any profit to the contractor. What is apparent in the present case is that the Assessing Officer did not accept the profit declared by the assessee from this activity, i.e., executing a contract for the Public Works Department. H .....

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..... an income of Rs. 17,266 arising merely from the supply of building materials by the Government. We, therefore, answer question No. 1 in the negative, i.e., in favour of the assessee and against the Revenue. As regards question No. 2 the same proceeds on the assumption that the car was used by the partners and members of their families for their personal work to the extent of 25 per cent. A finding to that effect is a finding of fact and that finding of fact having not been challenged, the answer to this question is self-evident because of the specific provision of section 38(2) of the Act which is as under : "(2) Where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession the .....

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