TMI Blog1982 (9) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... 69-70 could be construed as premiums for parting with a capital asset and, in that view, holding that the said amounts were capital receipts and not revenue receipts in the assessee's hands ?" The facts relevant for the purpose of this case are is follows: One group of Khannas, namely, Aminchand Khanna, Indra Kumar Khanna, M.. Khanna and Vijoy Kumar Khanna, took on hire 23 buses from M/s Salkia Transport Agency Pvt. Ltd. (hereinafter described as" the company ") under an agreement dated March 29, 1963. The said Khannas formed themselves into a partnership styled, as M/s. Salkia Transport Associates with the object of plying the aforesaid 23 buses. Salkia Transport Associates, the assessee herein, replaced five of the worn out buses with five new buses. Clause 10 of the agreement between the parties provided: " The agents shall, during the continuance of the agency, keep the motor vehicles in good repaired running condition complete with all necessary accessories, tools and implements which they have received from the owners as clearly described in schedule C attached hereto and, if necessary, shall replace one or more or all of the said motor vehicles at their own cost. Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the agreement dated March 29, 1963, and also by virtue of the assessee-firm bearing the entire cost of those five buses. The AAC further held that the fact that the assessee was not holding the permits to run the buses on any particular route would not detract from the assessee's ownership of those five buses. He directed the ITO to grant depreciation to the assessee-firm in respect of the five new buses replacing the five old buses of the fleet. In the appeals for the assessment years 1964-65, 1965-66, 1967-68, 1968-69 and 1969-70, the assessee further challenged before the AAC the treatment of the sums of Rs. 68,652, Rs. 52,500, Rs. 14,706, Rs. 4,578 and Rs. 23,343, respectively, received from the persons to whom it sub-let some of the buses in the relevant previous years as revenue receipts. Confirming the finding of the ITO, the AAC held that the assessee could not produce any evidence to show that the amounts in question were received by it from the sub-lessees towards the cost of the buses. He further held that these amounts were paid by the sub-lessees as consideration for allowing them to exploit those buses in the transport business and that the receipts were, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation allowance on the cost of those five vehicles merely on the ground that those vehicles do not stand registered under the Motor Vehicles Act in the name of the assessee." The issue raised in the appeals of the assessee regarding the assessability of the amounts received by the assessee from the persons to whom it sub-let some of the buses was considered by the Tribunal in para. 23 of its order. It was contended before the Tribunal by the assessee's counsel, that these amounts received by the assessee-firm from its sub-lessees were of the same character as the sum of Rs. 1,76,172 paid by the assessee to the owner of the buses (company) and that when the latter payment was treated as capital expenditure by the departmental authorities, these amounts also must be treated, by a parity of reasoning, as capital receipts. It was further contended before the Tribunal that these amounts received from the sub-lessees were premiums (salami) and represented the price or consideration for the assessee parting with the assets and did not represent hire charges paid in advance. Accepting these contentions, the Tribunal held as follows: "We find considerable force in these submissions. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition. The assessee was also under an obligation to replace one or more or all of the said motor vehicles at their own cost, if necessary. It was provided in the agreement that the assessee had to keep the owners informed about the replacements. It was also categorically provided that " the vehicles so replaced will be the property of the agents ". In view of the agreement, it is very difficult to accept the contention made on behalf of the Revenue that the assessee did no become the owner of the new vehicles that were purchased in replacement of the old and worn out vehicles. The argument that the assessee was not the registered owner of the vehicles under the Motor Vehicles Act is also of no consequence. It is well settled that an assessee will not be entitled to depreciation allowance if he is not the owner of the buildings, machinery, plant or furniture unless he is the owner of the same. Sub-section (1A) of s. 32 which came into effect from April 1, 1971, provides an exception to this rule but this sub-section is confined to buildings only and does not extend to plant machinery or furniture. But there is no provision under the Motor Vehicles Act which requires registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determinative of the ownership of the vehicle." The question of ownership is essentially a question of fact. In this case the agreement clearly provides that the new vehicles acquired in replacement of the old and worn out vehicles will be the property of the assessee. That the assessee has purchased five new buses is not disputed. The only argument is that the vehicles were not registered in the name of the assessee under the Motor Vehicles Act. But that is one of the factors that has to be taken into consideration for deciding the question of ownership of the buses. It cannot be said as a matter of law that unless the buses are registered in the name of the assessee, the assessee cannot be regarded as the owner of the buses. On the contrary, the essential pro-requisite for registration u/s. 22(1) of the Motor Vehicles Act is ownership of a motor vehicle. Unless a person is the owner of motor vehicle he is not entitled to get it registered in his name u/s. 22(1) of the Motor Vehicles Act. The Tribunal in this case has come to the conclusion on a review of the facts and also of the agreement that the assessee was the owner of the five new buses and as such was entitled to claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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