High Court Of Madras
CIT vs. S. Sudhakar
Sections 32, 43(1)
R. Jayasimha Babu & Mrs. A. Subbulakshmy, JJ.
Tax Case No. 550 of 1988
28th October, 1998
R. Sivaraman, for the Revenue : P.P.S. Janarthana Raja, for the Assessee
MRS. A. SUBBULAKSHMY, J.:
The assessee purchased a bus for a consideration of Rs. 1,50,000 on 3rd April, 1979, from Mariappa Bus Service and claimed depreciation on the entire purchase value in respect of the said bus. The ITO did not allow depreciation on a sum of Rs. 30,000 representing one fifth of the sale consideration as the value of the route permit and treated the balance of Rs. 1,20,000 as the cost of the bus and he allowed depreciation to that extent. On appeal, the AAC directed the ITO to allow the depreciation on the entire amount of Rs. 1,50,000 being the purchase consideration for the bus and allowed the assesseeâs appeal. On further appeal, the Tribunal confirmed the order of the AAC and on that this reference has arisen.
2. At the instance of the Revenue, the following question has been referred to us : “Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee was entitled to depreciation on the entire purchase price of the bus without apportioning a part of the cost towards the value of the route ?”
3. Counsel for the Revenue submitted that depreciation cannot be allowed on the route value and the orders passed by the CIT and the Tribunal are not in order. It is stated in the sale deed that the seller has transferred the route permit also along with the bus for a consideration of Rs. 1,50,000.
4. Under the facts and circumstances, it is evident that the bus has been purchased by the assessee along with the route permit for a consideration of Rs. 1,50,000. The ITO has considered Rs. 30,000 representing one fifth of the sale consideration as the value of route permit and he has allowed depreciation only to the extent of Rs. 1,20,000.
5. Counsel for the Revenue cited the decision in the case of G. Vijayaranga Mudaliar vs. CIT (1963) 47 ITR 853 (Mad) and submitted that depreciation on the amount representing is not allowable on the amount representing the route permit. In the decision cited above, it has been held that the Department should allow depreciation only on the amount representing the value of the vehicle and depreciation is not allowable on the amount representing the route permit value.
Following the above decision, we find that the assessee is entitled to depreciation only on the value of the bus and not on the entire purchase value and we answer the question in favour of the Revenue and against the assessee.
[Citation : 247 ITR 747]