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Issues: Whether motor buses plying passengers on regular routes are buses run on hire for the purpose of claiming depreciation at 40% under Appendix I, Part I, Item III-E(1A) of the Income-tax Rules, 1962.
Analysis: The depreciation schedule distinguishes between motor buses and motor lorries other than those used in a business of running them on hire, which attract 30%, and motor buses, motor lorries and motor taxies used in a business of running them on hire, which attract 40%. The decisive question is not whether each passenger pays separately or whether travel is by an individual, group, or institution, but whether the assessee carries on the business of plying the vehicles in a manner that amounts to running them on hire. Where the buses are used to carry passengers for hire on routes permitted by the transport authorities, the mode of payment or the number of passengers does not alter the character of the use.
Conclusion: The assessee's buses were used in a business of running them on hire and were entitled to depreciation at 40%.
Final Conclusion: The question referred was answered in favour of the assessee and against the Revenue, holding that the higher rate of depreciation was applicable to the buses in question.
Ratio Decidendi: For depreciation purposes, motor buses carrying passengers for fare on regular routes are treated as vehicles used in a business of running them on hire, and the applicable rate depends on the manner of use rather than on whether the hire is by an individual, group, or institution.
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