Law:

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Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/rate of - Assessment year 1999-2000 - Whether if assessee uses vehicles for its 'own use' or for its business other than 'business of running vehicles on hire', then 20 per cent is depreciation allowable whereas if assessee uses them in its 'business of running them on hire', depreciation allowable is 40 per cent and it is immaterial whether vehicles are hired to its sister concern or to a third party or to a total stranger - Held, yes M.V. Sesachala for the Appellant. S. Parthasarathi for the Respondent. JUDGMENT N. Kumar, J. - Sri S. Parthasarathi, learned Counsel takes notices for the respondent. 2. Heard the learned counsel for the parties. As the matter could be disposed of on a short point, by consent of the parties, this appeal is taken up for final hearing and disposed of by this judgment. 3. In this appeal the revenue has challenged the Order of the Income-tax Appellate Tribunal, Bangalore Bench, made in ITA No. 1284/Bang/2002 dated 7th April, 2005 upholding the order of the appellate authority and holding that the respondent is entitled to 40 per cent depreciation for the motor vehicles which are used in business of running them on hire. 4. Few facts leading to this appeal are as under : The respondent-assessee had leased to ferry BPL employees from city to factory and back to the residence, the motor vehicles for its sister concern. The assessee claimed depreciation at 40 per cent. The Assessing Officer restricted the depreciation to 20 per cent on the ground that the assessee is entitled to 40 per cent depreciation only when the motor vehicles are hired to public and not to its sister concern. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner. The Commissioner allowed depreciation at 40 per cent on the ground that once the vehicle is used for the business of hire, the assessee is entitled to 40 per cent depreciation, which order has been affirmed by the Tribunal. Challenging these orders, the revenue is before this Court 5. We have heard the learned counsel appearing for the parties. 6. Item…

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