- (1.) ON an application under s. 256(1) of the IT Act, Tribunal has referred the following questions for our opinion : (1) "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law by upholding the order of the CIT(A) holding that the appellant is entitled for depreciation @ 30 per cent and not @ 40 per cent as claimed by the assessee ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that leasing of vehicles on monthly rent to different concerns cannot be termed as used in the business of running on hire and accordingly Appendix-I Part III(2)(ii) is not applicable and the appellant is entitled for general rate of depreciation 30 per cent as per Appendix I, Part III(1A) of the Depreciation Schedule ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in observing that the assessee did not ply the vehicles on road and realise hire charges upon leasing the vehicles on monthly rent and as such the depreciation rate as per Appendix I, Sch. III(2)(ii) is not applicable ?"
(2.) NONE appeared for the assessee though the matter was listed 3/4 times. Heard learned counsel for the Revenue. The assessee-company is engaged in the business of leasing plant, machinery and vehicles which were purchased by it and given on lease on rent to various industries concerned. During the relevant previous year, the assessee company leased out vehicles worth Rs. 49,30,572 on the said vehicles. The assessee claimed depreciation at the rate of 40 per cent as provided in para III, Item No. E(1A) of Appendix-I of the Depreciation Schedule to the IT Rules. The claim of the assessee was allowed by the AO while passing the original assessment order on 19th Dec., 1989. Subsequently the mistake was found that assessee has not given the vehicles on hire but the vehicles were given on lease rent. When the assessee has not given the vehicles on hire, the depreciation was allowed on higher side in the original assessment and that was a mistake apparent on record. Therefore, a notice under s. 154 was issued and the mistake was corrected by order under s. 154 of the Act on 4th March, 1991. In appeal the view taken by the ITO rectifying the mistake was upheld by the CIT(A) as well as by the Tribunal. None appeared on the date of hearing, though the matter was listed 2/3 times at that time allowance appeared for the assessee. The admitted facts are that the assessee has not given the vehicle in question on hire. The vehicles are rented out or leased out for some period on rent.
(3.) IN Appendix-I to the Rules-Item D(9) of Para I of the Appendix, the motor buses and motor lorries other than those used in a business of running them on hire the depreciation rat is 30 per cent and in E-Item (1A) provides the depreciation in case of motor buses, motor lorries and motor taxies used in business of running them on hire, the rate of depreciation is specified as 40 per cent. When there are two different rates in two different type of cases the mistake is apparent, if the rate is not applied for which the assessee is entitled. The findings of the ITO, CIT(A) and the Tribunal are that the vehicles in question are not run by the assessee on hire. When those vehicles are not run by the assessee on hire, the depreciation rate is 30 per cent specified in the appendix annexed to the IT Rules. Therefore, in our view, there is no infirmity in the view taken by the Tribunal confirming the order of the ITO and CIT(A). IN the result, we answer all the three questions in the affirmative, that is, in favour of the Revenue and against the assessee. The reference application is, accordingly, disposed of.;