Enhanced depreciation for light motor vehicles depends on statutory definition and timing of acquisition and use, not restrictive labels.

Enhanced depreciation at 40% was available for a motor car acquired between 1 October 1998 and 31 March 1999 and used for business before 1 April 1999, because the third proviso to section 32 and Item III(iia) of Appendix I extended the commercial-vehicle rate to vehicles within the statutory definition of commercial vehicle, including a light motor vehicle. The benefit depended on the asset meeting the defined classification and the prescribed acquisition and user conditions, not on a restrictive commercial label or treatment as a hire vehicle. On that construction, the car qualified for the higher rate.

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Issues: Whether a motor car acquired between 1 October 1998 and 31 March 1999 and used for business before 1 April 1999 was eligible for depreciation at 40% as a commercial vehicle.

Analysis: The third proviso to section 32 of the Income-tax Act, 1961, and Item III(iia) of Appendix I to the Income-tax Rules, 1962, granted enhanced depreciation to commercial vehicles acquired and used within the specified period. The Explanation to the proviso and the note to Appendix I defined commercial vehicle to include a light motor vehicle, with the meaning of that expression drawn from section 2 of the Motor Vehicles Act, 1988. The classification depended on the statutory definition and the conditions of acquisition and use, not on a restrictive commercial nomenclature or the vehicle being treated as a hire vehicle. Since the assessee's car fell within the inclusive statutory definition and satisfied the temporal and user conditions, higher depreciation was available.

Conclusion: The assessee was entitled to depreciation at 40% on the car under the third proviso to section 32.

Final Conclusion: The common issue in both appeals was decided in favour of the assessee, resulting in partial relief for the first assessment year and full relief for the second.

Ratio Decidendi: Where a statute grants enhanced depreciation to commercial vehicles defined to include light motor vehicles, the benefit cannot be denied if the asset satisfies the statutory definition and the prescribed acquisition and user conditions.

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