Prakash Krishna, J. - (1.) This appeal was admitted by this Court on 6th Aug., 2001, on the basis of substantial questions of law, as referred to in the ground Nos. (d) and (f) in the memo of appeal. They are reproduced below : (1) Because the learned Tribunal was duty-bound to raise a presumption under the provisions of Section 114 of the Evidence Act concerning regular performance of judicial and official acts ? (2) Because the facts determined and found in the judicial order of C.M.M., Kanpur, to the effect that the tankers were being used on 31st March, 1997, without permit were binding on the IT authorities and, in any case, finding therein cannot be upset without reliable evidence and merely on conjectures and surmises.
(2.) The assessee is a private limited company. It is engaged in the transport of oil business. The dispute relates to the asst, yr. 1997-98. It claimed depreciation of two oil tankers bearing registration Nos. UP-78-N/6916 and UP-78-N/6917. These tankers were purchased by sale invoice dt. 17th Feb., 1997. The documents produced during assessment proceedings show that complete tankers along with body were duly delivered to the assessee by Motor and General Sales Ltd. on and after 26th March, 1997. The registration certificates of payment of road tax are dt. 31st March, 1997. In view of these facts the assessee claimed depreciation on the aforesaid two vehicles also which was denied by the AO, namely, Dy. CIT Circle-II(1), Kanpur on the ground that the vehicles were not actually used for the purposes of business in the relevant previous year. The assessee's claim for depreciation was negatived by the AO, CIT Circle-H(1), on the ground that these tankers could not have run on 31st March, 1997, as the relevant papers for plying on road were not available with the assessee. The reliance placed by the assessee on the challans on these oil tankers by the transport authority was also not accepted on the ground that challans are unnumbered and they do not bear any stamp of any authority and both the vehicles were challaned at the same place, i.e., at Rama Devi Chauraha at 4.00 PM on 31st March, 1997, show that the story of challan has been fabricated by the assessee to create a evidence that the tankers have been run. An adverse inference was drawn as the original challan documents could not be produced by the assessee before the assessing authority. The AO did not accept the order of the criminal Court dt. 12th Jan., 2000, imposing fine on the aforesaid vehicles for the breach of Motor Vehicles Act, committed by the disputed tankers on 31st March, 1997. The said assessment order was confirmed in appeal by the CIT(A) II, Kanpur, and second appeal by the Tribunal has also been dismissed by it on the ground "that the truck in respect of which certificate by the registration authority was issued only on 1st April, 1997, could not have been plied on 31st March, 1997." Heard Sri Yogesh Agarwal, learned counsel for the appellant, and Sri Govind Krishna, learned standing counsel for the Department, and perused the record.
(3.) Learned counsel for the appellant submitted that the assessee is entitled for depreciation under Section 32 of the IT Act. There is no requirement that the assets should be used in the whole assessment year in question. The object of the legislature in granting depreciation allowance under Section 32 of the Act is to give due allowance to the assessee for wear and tear suffered by the assessee, used by him in the business so that net income {total income) is duly arrived at. Elaborating the argument it was submitted that the words 'used for the purposes of business' should be given larger interpretation. An assets 'ready for use' but 'actually not used, is also entitled for depreciation. Reliance was placed upon Rules 47 and 48 of the Motor Vehicles Rules, 1989, which grant grace period of seven days for making application for registration of motor vehicles from the date of taking delivery of such vehicle excluding the period of journey. It was submitted that the facts that vehicles were challaned on 31st March, 1997, and subsequently penalty of Rs. 500 was also imposed by the C.M.M., Kanpur, clearly show that the vehicles were actually plied on 31st March, 1997. There is a presumption of correctness of the official acts under Section 114 of the Evidence Act and that presumption was wrongly not drawn by the authorities below.;