- (1.) THIS appeal was admitted on the following substantial questions of law: (a) Whether a disallowance made in an intimation under Section 143(1)(a) of the Income Tax Act, 1961 which is not repeated in the assessment made under Section 143(3) continues to have any existence and whether the Tribunal was justified in not dismissing the revenues appeal with reference to such disallowance/intimation as infructuous ? (b) Whether and in any event a prima facie adjustment under Section 143(1)(a) can be made in respect of depreciation claimed @ 40 per cent in terms of Item III(2) (ii) of Appendix I to the IT Rules, 1962 and any such adjustment would be beyond the scope of the power conferred by Section 143(1)(a) ? (c) Whether and in any event depreciation @ 40 per cent is admissible in respect of leased motor trucks/lorries used in the business of running them on hire and the Tribunal was justified in law in disallowing the appellants claim ?
(2.) THE facts of this case, as it appear briefly, are that the assessee company is engaged in the business of leasing out motor trucks and lorries. The assessee company received lease rent from the lessees and filed the return for the assessment year 1996 -97 under appeal claiming depreciation @ 40 per cent on leased out vehicles. However, the assessing officer while processing the return filed by the assessee allowed the depreciation @ 25 per cent on the ground that as per r. 5 and item III(2) (ii) of the IT Rules, 1962 (sic). The grievance of the appellant that 40 per cent depreciation is allowable when in a business, motor lorries and motor taxis are used. In a business of running motor vehicles on hire such depreciation is allowable but in the case of the assessee the profit & loss account shows income from lease rental and no income from hire charges has been shown. The assessee, being aggrieved, filed an appeal before the first appellate authority. The Commissioner (Appeals) accepted the contention of the assessee and allowed the depreciation @ 40 per cent on the leased out vehicles as against 25 per cent as allowed by the assessing officer. In turn, now the department has filed an appeal before the Tribunal. The Tribunal after considering the facts and further considering a decision of this High Court in the case of Soma Finance & Leasing Co. Ltd. v. CIT : (2000) 244 ITR 440 (Cal), came to the conclusion that when the vehicles in question are not run by the assessee on hire, the depreciation rate is 30 per cent which is specified in the Appendix annexed to the IT Rules and reversed the order of Commissioner (Appeals) and upheld the order of assessing officer that the assessee is not entitled for higher rate of depreciation on the leased vehicles/lorries. Mr. J.P. Khaitan, learned advocate appearing in support of this appeal pointed out that the said decision was, in fact, decided without hearing the assessee since the assessee did not appear although the matter appeared before the Bench on number of occasions. He tried to point out that the assessee could not place the facts before the Bench when the Bench considered the decision of the Tribunal and came to the conclusion in Soma Finance & Leasing Co. Ltd. (supra).
(3.) IN the instant case, the department did not appear before us and the table has been turned. We have granted times on number of occasions to enable them to appear before us and make their submissions on the point but our wishes have not been fulfilled and they did not appear before us when we finally took up the matter today after granting adjournment on number of occasions.;