High Court Of Kerala
CIT vs. Balakrishna Transports
Sections Rule Appendix I, Part I, Item III-E(1A)
Asst. Year 1983-84, 1984-85
V.V. Kamat & K. Narayana Kurup, JJ.
IT Ref. Nos. 102 & 103 of 1992
11th September, 1996
P.K.R. Menon & N.R.K. Nair, for the Applicant : P. Ravindran, for the Respondent
V.V. Kamat, J. :
With regard to the asst. yrs. 1983-84 and 1984-85, the question is as to whether depreciation at 40 per cent or 30 per cent is to be granted. In other words, the question expecting our answer is as follows :
“Whether, on the facts and in the circumstances of the case, (i) can the assessee be said to be engaged in the business of running the buses on hire as contemplated in Appendix I, Part I, Item III-E(1A) of the IT Rules and is not the finding wrong, unreasonable and perverse? (ii) the assessee is entitled to depreciation at the rate of 40 per cent?”
The assessee is a partnership firm engaged in plying transport buses carrying passengers on different routes. On its buses, with regard to the assessment years, they claimed depreciation at 40 per cent. It was not granted, but granted only at 30 per cent. Such percentage (40 per cent), it was held, would be available only for vehicles on hire. This was the view taken by the AO for both the years. The AO observed that the firm is a regular bus owner and vehicles are not hired, but they are utilised on regular routes on permits by charging regular fares from point to point or fixed points. It was, as a consequence, observed that a bus in question, in regard to which there is a claim at 40 per cent for depreciation, is not hired out, but regular charges are recovered from passengers from one point to another depending on the distance of travel. The officer took the view that 40 per cent depreciation would be available only to tourist buses and taxies as distinct from regular buses plying on routes according to the permits.
The first appellate authority upheld the reasoning of the AO and observed that an individual travelling from point A to point B by a transport bus cannot claim that he has hired the bus. This would be so even with regard to a group of persons belonging to one family who travel from Trichur to Calicut in the same bus and they cannot claim that they have hired the bus since the group may consist of ten or fifteen while the capacity of the bus would be much more than that.
Further travel of the proceedings before the Tribunal shows that the Tribunal relied upon its earlier order dt. 6th March, 1987, to the effect that the buses can be termed as stage carriages under the Motor Vehicles Act. A passenger pays the fare for the seat he occupies in the bus for travel from one point to another and as such, he is paying the fare for the seat he is occupying in the bus and, therefore, the assessee can be said to be engaged in the business of running the buses on hire, as contemplated in Appendix I of the IT Rules, 1962. Perusal of cls. 9 and E(1A) of the IT Rules would be relevant in this context. They are reproduced hereinafter one after the other: Class of asset Depreciation allowance as percentage ofâ(i) Remarks actual cost in the case of ocean-going ships; (ii) written down value in the case of any other asset I. xx xx xx xx xxxx xx xx xx xx xx xx III. D(9) Motor buses and motor lorries other than those used in a business of running them on hire (NESA) 30 xx xx xx xx xx xx xx xx xx xx E(1A) Motor buses, motor lorries and motor taxis used in a business of running them on hire (NESA) 40
The question is, as to whether the vehicles such as motor buses, motor lorries and motor taxies are used in a business of running them on hire or not. Really, the question requires consideration from the point of view of the assessee in the context. Whether the payment is made by one person or a group of persons or by individual passengers would be of total irrelevance in the context. The real question is, as to whether the assessee engaged in the business of plying vehicles as an activity uses the concerned vehicles for hire or not. It would be wholly irrelevant whether the assessee receives payments in regard to the activity of hire from a passenger, a group of passengers or an institution engaging the vehicle for its transport activity. In a given situation, an institution may engage itself in a transport activity taking the vehicles owned by someone else for plying. The mode of payment and as to whether a person makes payment or otherwise would not be a situation of relevance in the context of the consideration of the position of the assessee. The question would be the manner in which vehicles are plied. The situation of relevance would be as to whether the vehicles are running on hire or not. If there is no dispute that the vehicles are run for hire in any capacity, whether as a passenger service or as a tourist service or as a taxi service, the relevant situation is the manner in which the vehicles are run which belonged to the assessee in regard to which there is a claim for depreciation. Undisputedly, the assessee is a partnership firm engaged in transport activity. The transport activity is as regards plying of transport buses carrying passengers on different routes determined by the transport authorities. The passengers who travel in such buses travel on hire. This would obviously mean that the buses in regard to which depreciation is claimed would have to be understood in the necessary context of the situation with regard to the claim for depreciation that the buses are running on hire. As already stated, it may be that in a given situation it must be an individual, in another situation a group or at different situations it may be a marriage party. In our judgment, the situation would not make any difference. When vehicles in regard to which depreciation is claimed do not run otherwise than for hire, obviously, the situation would be governed by cl. E(1A) reproduced above.
8. For all the above reasons, the above question gets answer in the affirmative against the Revenue and in favour of the assessee.
[Citation : 233 ITR 133]