COMMISSIONER OF INCOME TAX Vs. MANJEET STONE COMPANY

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, at the instance of the Revenue, has referred the following question of law for the opinion of this court :

(2.) THE assessee, M/s. Manjeet Stone Company, Kota, is carrying on the work of quarrying and sale of stones excavated from mines and derives its income from this business. THE assessee owns trucks which are used mainly for carrying the stones from the quarry to the sales depot or to the godown of the assessee. THE trucks are registered as "public carriers". For the assessment year 1981-82, the assessee claimed depreciation on these trucks at the rate of 40%. THE Income-tax Officer allowed depreciation at the rate of 40% as claimed by the assessee. THE Commissioner of Income-tax initiated proceedings under Section 263 of the Income-tax Act against the assessee and, after giving notice to the assessee under Section 263, set aside the order passed by the Income-tax Officer as, according to the Commissioner of Income-tax, the order passed by the Income-tax Officer allowing depreciation at 40% was prejudicial to the interests of the Revenue and directed the Income-tax Officer to modify the assessment order so as to restrict the depreciation on the trucks to the extent of 30% only. Dissatisfied with the order passed by the Commissioner of Income-tax, the assessee preferred an appeal before the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, and the Tribunal, by its order dated November 19, 1984, allowed the appeal filed by the assessee and held that depreciation at 40% on the trucks is to be allowed on the same basis as if the assessee was using it for hiring. Aggrieved by the order passed by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, the Revenue moved an application under Section 256(1) of the Income-tax Act to refer the question of law mentioned in the application for the opinion of the High Court and the Tribunal, by its order dated June 27, 1985, referred the question of law mentioned in para No. 1 above.

(3.) A plain reading of both these entries, i.e., Entry No. III(ii)D(9) and III(ii)E(1A) given in Part I of Appendix-I, appended to the Rules, shows that if the motor buses, motor lorries and motor taxis are used in a business of running them on hire, then those motor vehicles are covered under entry No. III(ii)E (1A) of Appendix-I and are entitled to depreciation at 40% and the motor buses and motor lorries other than those used in the business of running them on hire are entitled to depreciation at 30%. It is true that the relevant clause does not lay down the requirement of hiring wholly or exclusively, but the entry has maintained the distinction about the entitlement to depreciation at 40% and 30%. In the case of motor buses and motor lorries other than those used in a business of running them on hire they are entitled to depreciation at 30% while the motor buses, motor lorries and motor taxis used in a business of running them on hire are entitled to depreciation at 40%. If a truck is not used for hiring but for the purpose of one's own business, then it would be entitled to depreciation at 30% and not 40%. The context of the relevant entry does indicate the same.