INTEGRATED FINANCE CO. LTD Vs. CIT

JUDGEMENT

(1.) THIS Tax Case (Appeal) filed by the assessee was admitted on the following substantial question of law:

(2.) THE assessee is a non-banking finance company. In respect of the assessment year 1994-95, the assessee claimed depreciation on hire purchase assets under hire purchase transaction. The assessee claimed that they being the owner of the assets and that the hirer not having claimed the depreciation, they were entitled to the grant of depreciation on hired assets. The claim of the assessee was rejected. Aggrieved by the same, the assessee went on appeal before the Commissioner of Income Tax (Appeals). The assessee placed reliance on the beneficial Board Circular No.9 dated 23.3.1943 and submitted that since the assets were used in the business of the assessee by hiring it out, the assessee was entitled to the grant of depreciation under Section 32 of the Income Tax Act. The claim of the assessee was, however, rejected. Confirming the view of the Assessing Officer, the first Appellate Authority pointed out that as per the Scheme, the ownership and possession of the assets were with the purchaser and the assessee was the hirer, collecting the instalments as per the agreement; consequently, depreciation have to be allowed only in the hands of the purchaser. Thus the assessee's appeal was rejected. Aggrieved by this, the assessee preferred a further appeal before the Income Tax Appellate Tribunal, which also rejected the case of the assessee. The Tribunal pointed out that the various persons to whom the vehicles were hired out, in fact, had the possession and were using them. As per the Board's circular, person who is in actual use of the vehicle was entitled to claim depreciation; consequently, the assessee could not be granted depreciation. Aggrieved by this, the assessee has filed this appeal before this Court.

(3.) ON the admitted fact as narrated above and on the facts found by the Tribunal, we have no hesitation in rejecting the case of the assessee, thereby confirming the order of the Tribunal. Even though the question of law admitted by this Court referred to Board's Circular No.689 dated 24.8.1994, the same has to be read as Circular No.9 dated 23.3.1943. The Tax Case (Appeal) stands dismissed. No costs.