TMI Blog2003 (9) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... m lease financing as lease rentals. In the course of assessment under s. 143(3), the AO observed that the assessees have leased out motor lorries and trucks in its lease business and claimed depreciation at 40 per cent thereon. The AO found that the assessees are engaged in the hire purchase and lease financing business and not in the business of running motor lorries and trucks on hire; he, therefore, asked the assessee to explain justification of its claim of depreciation at 40 per cent. In its reply, the assessees submitted that motor trucks and motor lorries hired on lease by it, have been used in the transport business of running them on hire/lease by the lessess. Therefore, it is entitled to claim depreciation as per Appendix I (read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 40 per cent as claimed by the assessees. 5. On the other hand, the learned authorised representative submitted that the Hon'ble Calcutta High Court, while deciding the issue in case of Soma Finance there was nobody on behalf of the assessee before the Hon'ble Trust in support of the contention that where the lessee itself used the vehicles for hiring purpose, the lessor is entitled to higher rate of depreciation even though it is engaged in the business of leasing and the vehicle has not been used by it for hiring purpose. The learned authorised representative relied on the decision of the Hon'ble Karnataka High Court in case of CIT vs. Maharashtra Apex Corporation Ltd. (1999) 154 CTR (Kar) 146 : (1998) 234 ITR 484 (Kar), which was u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry for hire in its business of leasing. The AO also held that it is the kind of use of the asset by the assessee which is to be considered and not the nature of use by third party, i.e., the lessees. As the assessee in the instant case was not in receipt of any income as transport charges/freight charges, the AO declined the assessee's claim for higher rate of depreciation. We also find from the record that in the immediately preceding asst. yr. 1998-99, the assessment framed under s. 143(3), as a scrutiny assessment, higher claim of depreciation at 40 per cent in respect of leased assets of commercial vehicles and taxis was allowed. Thus, the Department itself had accepted the claim of the assessees in respect of the block of assets being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble Supreme Court in the case of Maharashtra Apex Corpn. Ltd. while affirming the order of the Hon'ble Karnataka High Court report at (1999) 154 CTR (Kar) 146 : (1998) 234 ITR 484 (Kar) in which it was held that the assessee was entitled to extra-shift allowance of depreciation, even though it was the lessee, who had used the machinery in double shift, and the lessor has just leased it out in the course of its leasing business, the stand of AO does not hold correct. The cardinal rule of interpretation is that the statute must be construed according to its plain language and neither should anything be added nor subtracted therefrom unless there are adequate grounds to justify the inference that the legislature clearly so intende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easing 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 contraditory 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 s. 32, apart from the other two conditions indicated above, which all the assessees indubit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 s. 32 of the Act, the words "carried on by him" are missing. In our opinion, the ratio of the said decision clinches the issue is 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 CIT vs. A.R. Constructions (1999) 238 ITR 775 (AP), the Gauhati High Court in A.B.C. India Ltd. vs. CIT (1998) 145 CTR (Gau) 158 : (1997) 226 ITR 914 (Gau), the Madras High Court in CIT vs. Madan Co. (2002) 174 CTR (Mad) 172 : (2002) 254 ITR 445 (Mad) and the Delhi High Court in CIT vs. Bansal Cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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