FOMRA BROTHERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question that have been referred to us are :

(2.) THE assessee firm, besides dealing in electrical goods, acts as agents for distribution of Burmah -Shell products. It also maintains a fleet of cars and lorries which it hires out, solely we are informed, for the use of officials of the Burmah -Shell Co. The hire receipts from these vehicles have been 1954 -55 onwards. During the calendar years 1956 and 1957, relevant to the assessment year 1957 -58 and 1958 -59, respectively, the assessee purchased and used for this part of its business new cars and lorries. Development rebate under section 10(2) (vi) of the Act was claimed. In addition thereto, depreciation at the rate of 25 per cent. under the Income -tax Rules was also claimed. The Income -tax Officer denied the development rebate, merely stating, "Obviously development rebate cannot be granted on this." In so far as the depreciation was concerned, he granted 20 per cent. instead of 25 per cent. The appeal to the Assistant Commissioner failed, that officer holding that the purchase of new cars and hiring them out to other persons does not amount to installing of plant or machinery. He further held that the depreciation allowance of 25 per cent. was allowed only in respect of motor taxis and not in respect of cars. On further appeal to the Tribunal, apparently, a new contention was put forward by the department. That was that the income from the hiring of cars was not income which fell for computation under section 10 of the Act but under section 12. Section 12 being self -contained in so far as any allowances were permitted in the view of the Tribunal, the claim of the assessee to development rebate, which was not one of the items covered by section 12, could not be granted to it. The Tribunal also rejected the appeal in so far as the quantum of depreciation was claimed.It is in these circumstances that the matter stands referred for the determination of this court.

(3.) IT is not denied that in terms rule 8 applies to the present case. The relevant clauses thereof are (q) and (r) which specify the class of the asset and the rate at which the percentage of allowance is to be calculated. The entry (q) is "motor -cars" and the entry (r) covers "motor -taxis". The rate of depreciation for motor -cars is 20 per cent while that or motor -taxis is 25 per cent. The claim of the assessee that the vehicles in question should be regarded as taxis eligible for 25 per cent. depreciation seems to us to be unacceptable. A taxi as ordinarily understood is a vehicle which is available for every hirer. But in a case where vehicles are hired out to a single customer and to no one else, that vehicle cannot be regarded as a taxi. It is also pointed out in the orders of the officers below that these vehicles are not registered as motor -taxis. There is a material distinction between the two items referred to. We are satisfied that the refusal of the larger amount of depreciation allowance is fully justified. The second question is answered against the assessee.In the circumstances, there will be no order as to costs. Questions answered accordingly.