1. On an application under Section 256(1) of the Income-tax Act, 1961, the 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 Commissioner of Income-tax (Appeals) holding that the appellant is entitled for depreciation at 30 per cent, and not at 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, item III(2)(ii) is not applicable and the appellant is entitled for general rate of depreciation of 30 per cent, as per Appendix I, Part III(IA) of the Depreciation Schedule ?
3. Whether, on the fads 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, item III(2)(ii) is not applicable ?"
2. None appeared for the assessee though the matter was listed 3/4 Limes. Heard learned counsel for the Revenue.
3. 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 Part I, item IIIE(IA) of Appendix-I of the Depreciation Schedule to the Income-tax Rules. The claim of the assessee was allowed by the Assessing Officer while passing the original assessment order on December 19, 1989. Subsequently, the mistake was found that the 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 the record. Therefore, a notice under Section 154 was issued and the mistake was corrected by order under Section 154 of the Act on March 4, 1991. In appeal, the view taken by the Income tax Officer rectifying the mistake was upheld by the Commissioner of Income-tax (Appeals) as well as by the Tribunal.
4. None appeared on the date of hearing though the matter was listed 2/3 times at that time also none appeared for the assessee. The admitted facts are that the assessee has not given the vehicles in question on hire. The vehicles are rented out or leased out for some period on rent.
5. In Appendix I to the Rules, item D(9) of Part I motor buses and motor lorries other than those used in a business of running them on hire the depreciation rate is 30 per cent, and in item E(1A) provides the depreciation in case of motor buses, motor lorries and motor taxies used in a 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 types of cases the mistake is apparent, if the rate is not applied for which the assessee is entitled.
6. The findings of the Income-tax Officer, the Commissioner of Income-tax (Appeals) 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 Income-tax Rules. Therefore, in our view, there is no infirmity in the view taken by the Tribunal confirming the order of the Income-tax Officer and the Commissioner of Income-tax (Appeals).
7. In the result, we answer all the three questions in the affirmative, that is, in favour of the Revenue and against the assessee.
8. The reference application is, accordingly, disposed of.
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