SARDAR TARA SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference under section 66(1) of the Indian Income -tax Act, 1922, the question which we have been asked to answer is :

(2.) THE assessee carries on the business of motor transport and maintains a fleet of buses for that purpose. During the year of account, he claimed depreciation allowance under section 10(2) (vi) in respect of one of the buses bearing registration No. MPN -44 which was in his possession under a hire purchase agreement. The claim was disallowed by the Income -tax Officer on the ground that the said bus was not the property of the assessee at the material time. The Appellate Assistant Commissioner upheld this rejection in appeal. The claim was again pressed before the Appellate Tribunal. Along with it the assessee also urged before the Tribunal for the first time that he should have been allowed development rebate in respect of the bus under section 10(2) (vib). It was not disputed before the Tribunal that the assessee did not become the owner of the bus in the year of account. The Tribunal rejected both the claims by observing that having regard to the provisions of section 10(2) (vi) and section 10(2) (vib) the claims could not be allowed.

(3.) IN our judgment, the claim of the assessee is utterly untenable. The language of clause (vi) if section 10(2) is plain enough to show that the asset in relation to which depreciation allowance is claimed under that clause must be the property of the assessee. The words 'being the property of the assessee' used in clause (vi) do not lead to any other conclusion. In Jogta Coal Co. Ltd. v. Commissioner of Income -tax, the Supreme Court following the Privy Councils decision in Commissioner of Income -tax v. Buckingham and Carnatic Company Limited, has held that the word 'assessee' in section 10(2) (vi) refers to the person who owns the property in question and the cost to be considered for the purpose of calculating depreciation allowance is the original cost of the purchaser who is being assessed and not written down value to his predecessor. There can, therefore, be no doubt that, for claiming depreciation allowance in respect of an asset, the assessee must be the owner of the asset. The same requirement is essential for development rebate under clause (vib). It is true that this clause does not in so many words say that the machinery or plant should be the property of the assessee. But that clause is one of the fascicle of provisions dealing with depreciation allowance and other allowances and development rebate in respect of the assets which are the property of the assessee. Clause (vib) speaks of development rebate equivalent to twenty -five per cent, of the actual cost of such machinery or plant to the assessee. The rebate is thus calculated on the basis of the cost to the owner -assessee. That under clause (vib) development rebate can be allowed only to the owner of a machinery or plant also becomes clear by the proviso to that clause that an allowance under that clause shall not be admissible if the particulars prescribed for the purpose of clause (vi) are not furnished by the assessee in respect of the asset. Where an asset is let on hire, it is the assessee who owns the property who is entitled to the allowance in accordance with the provisions of clauses (iv), (v), (vi) and (vii) of section 10(2) as is clear from section 12(3) of the Act.