Law:

Section:

Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of - Assessment years 1967-68 and 1968-69 - Whether in a case where Tribunal recorded a finding that hiring of jeeps was a normal business activity of assessee which finding had become final, such jeeps constituted capital asset of assessee and were eligible for depreciation - Held, yes Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment years 1967-68 and 1968-69 - Whether in view of facts mentioned under heading 'Depreciation - Allowance/Rate of assessee was entiled to deduction of sum spent in connection with hiring of jeeps - Held, yes Section 28(i) of the Income-tax Act, 1961 - Business loss - Allowability of - Assessment years 1967-68 and 1968-69 - Whether in view of facts mentioned under heading 'Depreciation - Allowance/Rate of loss suffered by assessee on account of purchase and sale of jeeps was a capital loss - Held, yes FACTS The assessee, a private limited company, claimed a sum of Rs. 9,425 as business loss on the ground that it had purchased 18 jeeps for letting them on hire and had collected a sum of Rs. 15,380 by way of hire charges and that it had suffered the said loss on account of purchase and sale of these jeeps. It also claimed deduction of expenses of Rs. 3,828 incurred in connection with the hiring of the jeeps. It further claimed depreciation on the jeeps on the ground that the jeeps constituted its stock-in-trade. The ITO having found (i) that the jeeps were indeed purchased on a special order of hire placed by the City Congress Committee for use in election of the party candidate, (ii) that the jeeps were let out to the Congress party for election purposes whereafter they were returned to the assessee and sold, and (iii) that the hiring of vehicles was not the usual business of the assessee, refused to allow the loss of Rs. 9,425 as a business loss. It also disallowed the assessee's claims for deduction of expenses of Rs. 3,828 and for allowance of depreciation. On appeal, the AAC upheld the order of the ITO. On second appeal, the Tribunal held that the hiring of jeeps was a normal business activity of the assessee. It…

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