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Commissioner of Income Tax v/s Stanes Tyre and Rubber Products Limited

    Tax Case No. 1964 of 1984 (Reference No. 1429 of 1984)
    Decided On, 18 February 1998
    At, High Court of Judicature at Madras
    Deokinandan Commissioner. K. M. L. Majele Assessee, Advocates.

Judgment Text
The Order of the Court is as follows:

The question referred to us at the instance of the Revenue is,

"whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the motor vans and three wheelers owned by the assessee would fall under item No. III-D(9) of Appendix-I, Part I of the Income-tax Rules, 1962, and, consequently, they would be entitled to depreciation at the enhanced rate of 30 per cent. ?"

The assessee, Stanes Tyre and Rubber Products Limited, Coimbatore, had claimed depreciation on the vans and three wheelers owned by it for the assessment year 1972-73. The Income-tax Officer initially appears to have allowed depreciation at the rate of 30 per cent. but subsequently reopened the assessment and reduced the depreciation to 20 per cent. The assessee's appeal against that order was allowed by the Commissioner of Income-tax (Appeals), who held that the vans and three wheelers are not "motor cars, motor cycles, scooters or other mopeds" which are mentioned as item No. III-C(7) of Appendix I. The Revenue appealed to the Tribunal against that order of the Commissioner and the Tribunal has rightly confirmed the order of the Commissioner.

Vans and three wheelers are not specifically mentioned in Appendix I which sets out the table and rates at which depreciation is admissible. However, the fact that these vans and three wheelers are motor vehicles is undisputed. The assets mentioned in Appendix I specify several classes of motor vehicles. The intention of Parliament was to permit depreciation on motor vehicles as is evident from the entries set out in the Appendix. The two entries therein relating to motor vehicles are, item No. III-C(7) which reads as under:

"Motor cars, motor cycles, scooters and other mopeds (NESA)."

The other entry is item III-D(9) in the same Appendix which reads thus"Motor buses, motor lorries, motor taxis, motor tractors (NESA)."

The first of the two entries clearly refers to vehicles for personal use, motor cars being normally used for personal or family use, though they are also used as taxis. It also refers to two-wheelers of all kinds, motor cycles and scooters having been specifically mentioned, but other mopeds also have been included in the entry. Vans and three wheelers clearly do not fall within any of these entries as the van admittedly in this case was used as a goods vehicle and it cannot be regarded as a motor car.

The other entry No. IIID(9) deals with motor vehicles which are not normally used for personal use, but are used primarily either for hire or reward, or for carrying goods, or performing other operations such as agricultural operations. Motor buses mentioned therein are passenger vehicles which are meant to carry a large number of persons. Such buses are normally used for hire or reward though some employers provide the facility of transportation to their employees in buses owned by the employer for bringing the employees to the place of work and taking them home. Motor lorries are meant for carrying goods, motor taxis though they may be motor cars, are used for hire or reward. Motor tractors are used either to transport goods on trailers attached to them or for operations directly connected with agriculture.

The broad distinction between the two entries, therefore, is that while the entries in item No. C(7) refer to vehicles for personal or family use, vehicles mentioned in item No. D(9) refer to vehicles which are used mainly for hire or reward or for carrying of goods, or for operations connected with agriculture. Vans and three wheelers fall within the latter category as rightly held by the Tribunal. The Tribunal has also after looking into the registration certificates of the vehicles held that the three wheelers and the vans owned by the assessee had been registered as goods vehicles and were being used as suchThe fact that the

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vans and three wheelers are not specifically mentioned in the schedule, does not disentitle the assessee from claiming depreciation if those vans and three wheelers are capable of being brought under any of the heads mentioned in the schedule. We, therefore, answer the question that has been referred to us in the affirmative, against the Revenue and in favour of the assessee. The assessee is entitled to costs in the sum of Rs. 500.