COMMISSIONER OF INCOME TAX Vs. D.D. KHAITAN

JUDGEMENT

(1.) THE main question raised by the Revenue in these appeals under Section 260A of the IT Act, 1961, is as under: 'Whether the Tribunal was justified in law in allowing the higher rate of depreciation at the rate of 40 per cent to the assessed instead of normal rate of 25 per cent on lorries ?'

(2.) THIS question was answered by the Tribunal in favor of the assessed and against the Revenue, vide its order dt. 30th Dec., 2003, in ITA No. 2701/Del/2000 by holding as under: '6. We have heard the appellant Department and have also perused the orders of the lower authorities and we proceed with the issue in the following lines. At the outset, we may state that the Revenue has to fail in the present appeals. A gainful reference can be made to the orders of the CIT(A) wherein the issue has been discussed in an appropriate manner, which we are tempted to reproduce as under : 'There is no doubt about the fact that the assessed has derived income by way of lease rental. It is also a matter of fact that the lorries in question have not derived an income on account of hiring charges of a truck or lorry, it is entitled for a higher depreciation. It does not make any difference whether hiring charges called lease rental is earned on account of day -to -day hiring of the lorry or on account of hiring of the lorry on long -term basis for which lease rent is received. The reliance of the AO on CBDT Circular No. 652 is unjustified. On the contrary, the Circular No. 652 clarifies that hiring of the motor lorries could be entitled for higher depreciation. 7. A perusal of the aforesaid reveals that the factum of the assessed having deployed the impugned vehicles for which it was getting lease rentals, for hiring out is an established fact. thereforee, the conclusions drawn by the CIT(A) based on the aforesaid do not require any interference from our side. In the result, the Revenue has to fail. 8. In the result the two appeals of the Revenue are dismissed.'

(3.) THE CIT(A) while dealing with the facts of the case clearly held that there was no doubt about the fact that the assessed had derived income by way of lease rental and also that it was a matter of fact that lorries in question have not been utilised by the assessed in its own business. Thus, the appellate authority was of the opinion that AO had erred in law in interpreting and placing reliance upon Circular No. 652 of the CBDT in the manner as it was done. It was held that this circular clarifies that hiring of motor lorries would be entitled for higher depreciation. It is apparent from the order of the first appellate authority that there was no dispute to the fact that trucks leased out by the assessed to the third parties are run on hire. In view of this fact, apparently there could be no dispute to the consequential conclusion that same were not being used in the business of the assessed.