R.Kantha Rao, J. - (1.) WE have heard Sri V.R. Badri, the learned counsel representing Sri S.R. Ashok, learned counsel for the Revenue and Sri CP. Ramaswamy, the learned for the assesses.
(2.) IN fact R.C. No. 238 ofl996 came up for consideration before two of us (Justice B Prakash Rao and Justice R Kantha Rao) in the Division Bench. The reference involved the following questions. 1. Whether on the facts and in the circumstances of the case, the ITAT was correct in law in treating the transport vehicle as consisting of 'two parts viz. Cylinder and vehicle and allowing depreciation on the cylinder at 100% and not at 40%? 2. Whether, on the facts and in the circumstances of the case, the ITAT was correct in holding that the cylinder mounted on the vehicle which was' used for the transport of liquefied petroleum gas was liable for depreciation at 100% and not at 40%? Whether on the facts and in the circumstances of the case, the ITAT ought to have held that the transport vehicle was inseparable and two different rates of depreciation cannot be applied for a single vehicle? 3. As the judgements relied upon by the learned counsel on either side laid down conflicting views and the questions under reference sought to be answered are likely to arise for consideration in cases relating to the assesses similarly placed, we thought it appropriate to have an authoritative pronouncement and referred the very same questions to be answered by Full Bench. These references, thus, therefore, now before this Full Bench for consideration.
(3.) ALTHOUGH the Income Tax Appellate Tribunal, Hyderabad Bench "A" formulated the aforementioned three questions for reference to this Court for the opinion, the crux of the issue for consideration before us is in the matter of claiming depreciation under Sec. 32 of the Income Tax Act, 1961 in respect of a gas cylinder mounted on a chassis of a truck whether the assesses can claim depreciation at 100% treating it as gas cylinder including valves and regulators or whether the depreciation can be claimed at 40% treating the entire item as a heavy transport vehicle? The short facts necessary for considering the reference is that the assessee-firm is a dealer in liquefied petroleum gas of Hindustan Petroleum Corporation of India, Nizamabad. The LP gas cylinders were fitted to the chassis of transport vehicles. For the purpose of claiming depreciation, the assesses treated the entire item as consisting of two parts i.e. Cylinder/tanker, chassis and cabin. As per the Appendix 1 of Income tax Rules, 1962, the depreciation allowable U/s 32 of the Income Tax Act, 1961 for gas cylinders including valves and regulators is 100%, whereas for transport vehicle, it is 40% at the relevant time.;