COMMISSIONER OF INCOME TAX DELHI Vs. CHAIRANJI LAL NEW DELHI

JUDGEMENT

(1.) The following question of law has been referred to us under section 66(1) of the Indian Income-tax, New Delhi -

(2.) The assessee is an individual and the controversy relates to the assessment year 1960-61 (previous year ending 31-3-1960). The assessee purchased a motor-car for Rs. 14,500.00 on 7-2-1951. The Income-tax Officer held that the car was not wholly used for the purposes of the assessee's business. He, therefore, restricted the depreciation allowance admissible under section 10(2)(vi) to half the total depreciation permissible under the rules. The assessee all along accepted the position that the motor-car was used only partly for the purpose of business. During the assessment year in question the assessee sold the car for Rs. 6,000.00 In the assessment order dated 14th March, 1963, the Income-tax Officer computed the profit under section 10(2) (vii) second proviso, arising out of the sale of the motor-car, at Rs. 3,716.00, which represented the difference between the sale price and the written down value of the car (Rs. 2.284.00). The said written down value was arrived at on the basis of the depreciation admissible under section 10(2)(vi) on the car and not on the depreciation actually allowed. By a subsequent order made under section 154 of the Income-tax Act, 1961, the Income-tax Officer rectified the original order and fixed the written down value at Rs. 2,123.00. The assessee appealed before the Appeallate Assistant Commimissioner and contended that the written down value of Rs. 2,284.00 had not been correctly arrived at inasmuch as in arriving at such value the depreciation actually allowed should have been taken into account, and when so calculated it would come to much more than Rs. 2,284.00 The appellate Assistant Commissioner accepted the assessee's contention and directed that the written down value of the car should be taken as the original cost less depreciation actually allowed and the profit under section 10(2)(vii) should be the difference between the sale price and the correct written down value. The Revenue appealed to the Income- tax Appellate Tribunal. The contention of the Revenue before the Tribunal and its findings may best be put in the words of the Tribunal:-

(3.) In coming to this conclusion, the Tribunal relied on a decision of the Andhra Pradesh High Court in Vankadam Lakshminarayana. v. Commissioner of Income-tax Dealing with a similar argument, the High Court observed :-