Law: Income Tax Act, 1961

Section: 256

Income-tax---Reference---Question of law---Depreciation---Assessee, owner of trucks, claiming depreciation at 40 percent on ground trucks used in transportation business---ITO allowing depreciation only at 30 percent.---CIT (Appeals) finding that assessee had earned income from running of trucks on hire from army and other private parties---Same reflected in profit and loss account of assessee---Tribunal holding that assessee unable to establish that trucks were hired out to other parties or used in business of transportation of goods on hire---In view of finding of CIT (Appeals), question of law arose for reference---Indian Income Tax Act, 1961, Ss.32 & 256(2). For the assessment year 1987-88, the assessee claimed depreciation at the rate .f 40 per cent on the trucks owned by him and which had been used. in his transportation business in accordance with the circular of the CBDT as well as the Income-tax Rules. However, the Assessing Officer allowed only 30 per cent depreciation on the trucks. On appeal, the Commissioner of Income-tax (Appeals) accepted the claim of the assessee. On further appeal, the Tribunal held in favour of the Department in view of the fact that the assessee could not establish that the bucks were hired out to other parties or that they were used in his business of transportation of goods on hire. The assessee filed an application under section 256(1) of the Income Tax Act, 1961, for referring a question of law, which was rejected by the Tribunal. On an application filed under section 256(2): Held, that the Commissioner of Income-tax (Appeals) had found that the assessee had earned a sum of Rs.35,33,591 from the Army for reuniting of trucks on hire and a sum of Rs.4,72,860 from other private parties out of the said business as had been reflected in the profit and loss account of the assessee and that the assessee was using the trucks in the business of running them on hire and, therefore, depreciation at the rate of 40 percent. had to be allowed. In view of the finding of the Commissioner (Appeals), the question, whether the trucks were public carrier vehicles and whether the assessee was entitled to 40 percent. depreciation on the…

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