TMI Blog2004 (10) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... he above appeal was admitted by this court on August 6, 2001 on the basis of substantial question of law, as referred to in grounds Nos. (d) and (f) in the memo of appeal. They are reproduced below: (1) Because the learned Tribunal was duty bound to raise a presumption under the provisions of section 114 of the Indian Evidence Act, 1872 concerning regular performance of judicial and official acts? (2) Because the facts determined and found in the judicial order of C.M.M., Kanpur, to the effect that the tankers were being used on March 31,1997, without permit were binding on the income-tax authorities and in any case, finding therein cannot be upset without reliable evidence and merely on conjectures and surmises. The assessee is a private limited company. It is engaged in the transport of oil business. The dispute relates to the assessment year 1997-98. It claimed depreciation on two oil tankers bearing registration number UP 78-N/6916 and UP-78-N/6917. These tankers were purchased by sale invoice dated February 17, 1997. The documents produced during the assessment proceeding show that complete tankers along with body were duly delivered to the assessee by Motor and General ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and tear suffered by the assessee, used by him in the business so that net income (total income) is duly arrived at. Elaborating the argument it was submitted that the words "used for the purposes of business" should be given larger interpretation. An asset "ready for use" but "actually not used", is also entitled for depreciation. Reliance was placed upon rules 47 and 48 of the Motor Vehicles Rules, 1989 which grants grace period of seven days for making application for registration of motor vehicles from the date of taking delivery of such vehicle excluding the period of journey. It was submitted that the fact that the vehicle was challaned on March 31, 1997, and subsequently penalty of Rs. 500 was also imposed by the C.M.M., Kanpur, clearly shows that the vehicles were actually plied on March 31, 1997. There is a presumption of correctness of official acts under section 114 of the Evidence Act and that presumption was wrongly not drawn by the authorities below. In contra, learned standing counsel submitted that to claim depreciation under section 32 of the Act it is essential to establish that the asset was actually used during the relevant previous year by the assessee. He s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture and surmises. In the case in hand the finding of non-user of the oil tankers in question is based upon guess work and surmises as well as non-consideration of relevant material on record. There is a presumption that judicial and official acts have been regularly performed. The said presumption should have been drawn by the authorities below and, therefore, the case should have been examined as to whether the said presumption stands rebutted on the basis of material on record or not. The said presumption is available under law to the assessee-appellant. It is difficult to accept that the orders passed by the Chief Judicial Magistrate, levying penalty were collusive in nature and were only "stage show". The Tribunal was obsessed with a view that since the registration of the vehicle by the registering officer under the Motor Vehicles Act, 1988 was granted on April 1, 1997, the vehicle could not be plied on March 31, 1997. The Tribunal approached the said problem with wrong angle. For the income-tax purposes the Tribunal was required to examine as to whether the assets (oil tankers) were used during the previous assessment year or not. The user of oil tankers even prior to obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehicle that the vehicle should be registered under the Motor Vehicles Act in the assessee's name. Interpreting section 32(1) of the Act it was held that the said section provides deduction "in respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purpose of business or profession". In that case there was no dispute that the buses were used in the assessee's business. The only dispute was whether the buses were owned by the assessee. It was held that section 22(1) of the Motor Vehicles Act (old Act) does not lay down that a person cannot be the owner of a motor vehicle unless the motor vehicle is registered in his name. Reliance was placed upon a judgment of the Supreme Court in the case of K.L. Johar and Co. v. Deputy CTO [1965] 16 STC 213 (SC). CIT v. Nidish Transport Corporation [1990] 185 ITR 669 (Ker) is an authority for the proposition that the motor vehicle is a movable property and transfer of ownership is governed by the Sale of Goods Act. Transfer takes effect from the date of sale. Registration is not necessary to pass title in the motor vehicle, to claim depreciation under the Income-tax Act. The same view has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erely kept in the store. Looking to the nature of business of that assessee, who was a transporter it was held that keeping spare engines in store to meet emergent situations, was the requirement of business. In view of the above exposition of law the case in hand is to be examined. The two oil tankers along with mounted bodies were purchased for the business purposes by the assessee who is a transporter during the accounting year. It is not the case of the Department that these oil tankers were not necessary for the business purposes of the assessee-appellant. These oil tankers were actually plied on the road on the last date of the accounting year and were challaned and also fined by the C. M. M., Kanpur. Therefore the oil tankers were actually put to use in the relevant accounting year by the assessee for its business purposes. Alternatively the assessee was entitled for depreciation on these two oil tankers as they were purchased during the relevant accounting year for business purposes and were ready to use, road tax was deposited and the oil tankers were got registered with the registering authority on the last date of the accounting year. Failure of the assessee to produce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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