TMI Blog2002 (11) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... stion formulated above. - - - - - Dated:- 13-11-2002 - Judge(s) : D. K. JAIN., MS. SHARDA AGGARWAL. JUDGMENT The judgment of the court was delivered by D.K. JAIN J.-These eight appeals by the Revenue under section 260A of the Income-tax Act, 1961 (for short "the Act"), are directed against the orders passed by the Income-tax Appellate Tribunal, New Delhi Benches, in I.T.A. Nos. 262/Delhi of 2001, 753/Delhi of 2001, 2625/Delhi of 1992, 8642/Delhi of 1992, 8642/Delhi of 1992, 2629/Delhi of 1992, 428(Delhi) of 1998 and 3676/Delhi of 2000. In our view, the following common substantial question of law arises out of the orders of the Tribunal: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee was entitled to depreciation allowance under section 32 of the Act at 40 per cent. in respect of the commercial vehicles, owned by it but leased out to a third party?" Since we have heard learned counsel for the parties at considerable length, we proceed to dispose of all the appeals at this stage itself. The appeals pertain to different assessment years, but there being no material difference in the language of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lcutta High Court in Soma Finance and Leasing Co. Ltd. v. CIT [2000] 244 ITR 440, the Rajasthan High Court in CIT v. Sardar Stones [1995] 215 ITR 350, and the Karnataka High Court in Gowri Shankar Finance Ltd. v. CIT [2001] 248 ITR 713. Learned counsel for the assessee, on the other hand, have vehemently submitted that since the issue stands concluded by the decision of the Supreme Court in CIT v. Shaan Finance (P.) Ltd. [1998] 231 ITR 308, no fault can be found with the view taken by the Tribunal. They would submit that since the assessees are engaged in the business of leasing the vehicles, which activity by itself is a business of hiring and the lease income derived by them is being assessed as business income, the assessees fulfil all the requisite conditions under section 32 of the Act read with rule 5 and entry III(2)(ii) of Appendix I to the said rules, thus entitling them to depreciation at the rate of 40 per cent. It is asserted that in none of the cases before us, the Assessing Officer has found that the leased out vehicles were not being used for running them on hire. In support of their stand, learned counsel have placed reliance on the decisions of the Andhra Pradesh H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious year." The rule only provides that the depreciation allowance in respect of block of assets shall be calculated at the percentage specified in the second column of the Table in Appendix I to the Rules on the written down value of such block of assets as are used for the purposes of the business or profession of the assessee. The relevant entry in the said Appendix is as follows: "III. Machinery and plant: (1) Machinery and plant other than those covered by sub-items (1A), (2) and (3) below. (1A) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after the 1st day of April, 1990. (2)(i) Aeroplanes-Aeroengines. (ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire..." From a conjoint reading of the aforenoted provisions it is clear that the higher rate of depreciation in respect of motor buses, motor lorries and motor taxis is admissible if these are used in a business of running them on hire. The existence of the specified assets, the assessee's ownership thereof and these being used in running them on hire are not in dispute. The only objection of the Revenue to the grant o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur opinion, on a plain reading of the section and the relevant entry in the Appendix, it is clear that it is the end user of the specified asset which is relevant for determining the percentage of depreciation. The section requires that the asset should be used for the purposes of the assessee's business and the entry in the Appendix refers to the user it should be put to. Apart from the fact that the leasing out of the vehicles is by itself tantamount to hire of vehicles, we are unable to read into any of the aforenoted provisions the requirement that the assets are to be used by the assessee for the purposes of "his" business or profession. Once it is accepted that the leasing out of the vehicles is one of the modes of doing business by the assessee and in fact the income derived from such leasing is treated as business income of the assessee, it would be clearly contradictory in terms to hold that the vehicles in question were not used wholly for the purpose of the assessee's business, which, as noted above is one of the requisites stipulated in section 32, apart from the other two conditions indicated above, which all the assessees indubitably fulfil. At this juncture we may, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation or distribution of electricity or any other form of power'. Sub-section (2)(b)(ii) refers to small-scale industrial undertakings which may use the machinery for the business of manufacture or production of any article, and sub-section (2)(b)(iii) refers to the business of construction, manufacture or production of any article or thing other than that specified in the Eleventh Schedule. Sub-section (2)(b), therefore, refers to the uses to which the machinery can be put. It does not specify that the assessee himself should use the machinery for these purposes." It is significant to note that the above view was expressed when the expression used in the section is the specified machinery "which is owned by the assessee is wholly used for the purposes of the business carried on by him", whereas in section 32 of the Act the words "carried on by him" are missing. In our opinion, the ratio of the said decision clinches the issue in favour of the assessees and the view taken by us is in line with the said decision. We are fortified in our view by the decisions of the Andhra Pradesh High Court in A. M. Constructions' case [1999] 238 ITR 775, the Guwahati High Court in A.B.C. India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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