COMMISSIONER OF INCOME TAX Vs. CHAMPALAL

JUDGEMENT

(1.) THESE two applications have been moved under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), in respect of the assessment years 1981-82 and 1983-84 after the application under Section 256(1) of the Act has been rejected, vide order dated November 6, 1990, and April 9, 1991, by the Income-tax Appellate Tribunal, raising the following question of law :

(2.) THE assessee is an individual carrying on business in explosives. He claimed depreciation at the rate of 40 per cent. in respect of his vehicles. THE Income-tax Officer allowed depreciation only at the rate of 30 per cent., as according to the Income-tax Officer, the vehicles were used in his own business and he was not carrying on the business of transportation. An appeal was filed by the assessee which was allowed by the Commissioner who held that depreciation should have been allowed at the rate of 40 per cent. inasmuch as the assessee was using the vehicle for letting out on hire besides using for his own business. THE Department went before the Appellate Tribunal and the learned Departmental Representative conceded that the point was covered by the order of the Bench in the case of an assessee in Income-tax Appeal No. 816/(JP) of 1983, where the order of the Commissioner of Income-tax (Appeals) was upheld, the appeal was dismissed. An application thereafter under Section 256(1) of the Act was filed which too was rejected, hence these applications.

(3.) THE rates on which depreciation is admissible have been provided in the depreciation Table given in Appendix I, Part I of the Income-tax Rules, 1962. In the Table of rates of depreciation, there are two entries relating to motor buses and motor lorries which provide the "rate of depreciation" allowable on these items and the same read as under :