MULTICAN BUILDERS LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) A simple question has been raised by Mr. Khaitan, appearing on behalf of the assessee, challenging the order of the learned Tribunal in respect of the assessment year 1986-87 on the strength of an agreement executed on September 1, 1986, when the accounting year expired on September 30, viz : whether the subject vehicles so leased under the said agreement were used for the purpose of business in the previous year 1986-87 in order to enable the assessee to obtain the benefit of depreciation under Section 32 of the Income-tax Act, 1961. Submission on behalf of the appellant:

(2.) Mr. Khaitan had supported his submission on the basis of the materials on record relying on certain decisions to which we shall be referring at the appropriate stage. According to him, the assessee having been carrying on the business of leasing out, as soon as the vehicles were leased out, the vehicles are used for the purpose of the assessee's business. He referred to various terms of the agreement and pointed out that the vehicle, which was purchased on August 4, 1986, was intended to be taken delivery of by the lessee at his own risk from the supplier and the registration was also his responsibility. Notwithstanding anything contrary thereto, the lease was supposed to commence from September 1, 1986, without any allowance in the rent in the case of default or infraction in the process of receipt of delivery and registration.

(3.) He went a step ahead and contended that even if the vehicle was not leased out, the moment the assessee purchased the vehicle for the purpose of leasing out, it would amount to use of the vehicle for the purpose of his business. He contended that even a stand-by generator was held to be a use for the purpose of the business. He also contends that a trial run of a plant would also amount to use of the plant for the purpose of the business even though actual business may not commence. He also contends that even though the plant does not operate during the period of the previous year when the factory was under lock-out has also been held to be a use for the purpose of the business.