High Court Of Kerala
CIT vs. Air Travel Enterprises India Ltd.
Sections 32(1)
Asst. Year 1992-93
G. Sivarajan & C.N. Ramachandran Nair, JJ.
IT Appeal No. 90 of 2000
30th September, 2002
Counsel Appeared
P.K.R. Menon & George K. George, for the Appellant : K.L. Narasimhan, for the Respondent
JUDGMENT
By the court :
The respondent is the assessee. The assessee is a private limited company carrying on business in travel agencies and as operator of tourist vehicles. The assessment year concerned is 1992-93.
2. The substantial questions of law on which the appeal by the Revenue is admitted read as follows :
“1. Whether, on the facts and in the circumstances of the case and also in the light of the admission of the assessee that the vehicle was run only on 1st April, 1992, the assessee is entitled to depreciation for the asst. yr. 1992-93 ?
Whether, on the facts and in the circumstances of the case and in view of the fact that registration for operating as a contract carriage was obtained on 5th May, 1992, is not depreciation admissible only from the asst. yr. 1993-94 ?”
The facts on record are that the assessee purchased a vehicle and took delivery of the same on 30th March, 1992. There was a temporary registration obtained in respect of the vehicle as KL7/2169/92-E valid up to 24th April,1992. This enabled the assessee to take the vehicle from Ernakulam to Thiruvananthapuram. The assessee also applied for registration as a non-transport vehicle on 30th March, 1992, and the registration was granted on 3rd April, 1992. In the said certificate it was clarified that “this certificate is valid from 30th March, 1992 to 29th March, 2007”. According to the assessee, it had operated the said vehicle from 1st April, 1992, for taking a tourist party with 13 persons for which the arrangement had been made before that date. However, it is stated that the vehicle was registered as a contract carriage only on 5th May, 1992.
On the basis of the above materials, in the assessment for the year 1992-93, the assessee claimed depreciation of Rs. 1,50,560 on the said vehicle. The AO disallowed the claim for depreciation on the ground that the assessee has not used or kept the vehicle ready for use on or before 31st March, 1992. The first appellate authority, viz., the CIT(A), Thiruvananthapuram, dismissed the appeal filed by the assessee by confirming the disallowance. The Tribunal in further appeal, however, allowed the claim of the assessee. The Department is aggrieved by the order of the Tribunal. Hence, this appeal.
We have heard learned standing counsel appearing for the appellant and learned counsel appearing for the respondent. Sec. 32 of the IT Act provides for depreciation in respect of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession subject to the provisions of s. 34. It is not necessary to refer to the provisions of s. 34, for, only ground on which the AO has disallowed depreciation is that the assessee had not used or kept ready for use the vehicle at any time prior to 31st March, 1992.
So the only question for consideration is as to whether the assessee had used the vehicle or kept ready for use the vehicle on any day during the previous year relevant to the asst. yr. 199293. Admittedly, the assessee took delivery of the vehicle on 30th March, 1992, and the vehicle was taken from Ernakulam to Thiruvananthapuram on the basis of a temporary permit valid upto 24th April, 1992. The assessee got registration as a non-transport vehicle on 3rd April, 1992, with retrospective effect from 30th March, 1992. The assessee had applied for and obtained a contract carriage licence only on 5th May, 1992. The assessee has a case that the vehicle was run on 1st April, 1992, for taking a tourist party. As the AO himself had noted the expression “used for the purpose of the business” occurring in s. 32 will take in vehicle kept ready for use. So the question is whether it can be said that the vehicle was kept ready for use on 30th March, 1992 or 31st March, 1992, when the regular contract carriage licence was issued only on 5th May, 1992. The question on which notice is issued proceeds on the basis that the vehicle was actually used on 1st April, 1992. The question is whether the assessee can use the vehicle for carrying tourists on 1st April, 1992, when admittedly the contract carriage licence for the vehicle was issued only on 5th May, 1992. On the other hand, if the vehicle can be operated on the basis of a regular licence for operating as a non-transport vehicle issued by the registering authority on 3rd April, 1992, with retrospective effect from 30th March, 1992, then it can be said that the vehicle was kept ready for use from 30th April, 1992. However, the question is whether on the basis of the certificate of registration so granted, the vehicle can be operated as a contract carriage. In other words, can it be said that the vehicle was kept ready for use as a contract carriage without registering the vehicle as a contract carriage, which was obtained only on 5th May, 1992, as noted by the first appellate authority.
7. Going by the provisions of the Motor Vehicles Act, 1988, ss. 2(7), (35), 66, 72, 73 and 74 we are of the view that in order to say that the vehicle was kept ready for use for carrying persons for hire the vehicle must be registered as a contract carriage and it is only on obtaining the contract carriage permit that it can be said that the vehicle was kept ready for use. Since the contract carriage permit was obtained for the vehicle only on 5th May, 1992, it cannot be said legally that the vehicle was kept ready for use on or before 31st March, 1992. We accordingly answer the two questions against the assessee and in favour of the Revenue. In the above circumstances, we are of the view that the Tribunal has committed a serious error in holding that the assessee had kept the vehicle ready for use during the previous year relevant to the asst. yr. 1992-93. We accordingly set aside the order of the Tribunal on the issue of depreciation on a DCM Toyota Carrier taken delivery from Popular Vehicle Services Ltd., Kochi, on 30th March, 1992. ITA is disposed of as above.
[Citation : 265 ITR 537]
