1962 (2) TMI 100 - HC - Income Tax

Summary

Issues:
1. Calculation of depreciation on buses purchased by the assessee.
2. Jurisdiction of the Appellate Tribunal to enhance the value of route rights.
3. Permissibility of considering entire consideration as the value of vehicles alone.

Analysis:
1. The assessee purchased buses and claimed depreciation on the entire consideration of Rs. 1,25,000 as the original cost of acquisition. The Income-tax Officer estimated the "route value" at Rs. 40,000 and granted depreciation on the remaining Rs. 85,000. The Appellate Assistant Commissioner upheld this decision, stating the Officer was liberal. The Tribunal partially allowed the appeal, estimating the route value at Rs. 60,000. However, the Tribunal rectified its order, deleting the figure of Rs. 60,000 and dismissing the appeal, correcting the error. The High Court held that the Tribunal's decision to fix the route value at Rs. 60,000 was erroneous, but since it rectified the mistake, the decision affirming the route value at Rs. 40,000 was supported by the record.

2. The Appellate Tribunal had no jurisdiction to enhance the route value without a departmental appeal. The High Court noted that the Tribunal rectified its order, deleting the enhanced value and dismissing the appeal. As a result, the question of whether the Tribunal could enhance the value of route rights was not answered, as the Tribunal corrected the error by deleting the enhanced value and dismissing the appeal.

3. The assessee argued that the entire consideration of Rs. 1,25,000 should be considered as the value of the vehicles alone, as per the Motor Vehicles Act, which prohibits transferring permits for pecuniary consideration. However, the High Court stated that while the Act prohibits transfer without permission, it does not explicitly prohibit receiving consideration. The court observed that the consideration for a transfer of permits is often linked to the earning capacity of the buses, which includes the routes they operate on. In this case, the department's decision to allow depreciation on Rs. 85,000, deducting the route value of Rs. 40,000 from the total consideration, was deemed appropriate by the court.

In conclusion, the High Court found that the Tribunal's initial decision to fix the route value at Rs. 60,000 was erroneous, but the rectification of the error rendered the decision affirming the route value at Rs. 40,000 valid. The court also clarified the permissibility of considering the entire consideration as the value of vehicles alone, noting that consideration for permit transfers is often linked to the routes' earning capacity.