Higher depreciation on leased vehicles denied where actual use in running them on hire was not shown.

Higher depreciation on motor vehicles is admissible only where the vehicles are actually used in the business of running them on hire; mere leasing out of vehicles does not satisfy that condition. The Court followed its earlier binding decision on the same issue and rejected the plea that it was per incuriam, finding no ignorance of any statutory provision or binding precedent. Although tax consistency cannot displace the principle that each assessment year is a separate cause of action, the prior view still controlled the controversy. The assessee was therefore not entitled to the higher rate of depreciation, and the Tribunal's order was reversed to that extent.

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Issues: Whether the assessee was entitled to the higher rate of depreciation on leased vehicles under Entry No. III(2)(ii) of Appendix I to the Income-tax Rules, 1962, on the footing that the vehicles were used for running on hire.

Analysis: The governing test is the actual user of the vehicles in the business of running them on hire. A leasing concern that merely lets out vehicles on lease does not satisfy that requirement. The issue had already been concluded by a prior decision of the same Court, and the later contention that the earlier view was per incuriam was rejected because no ignorance of any statutory provision or binding precedent was shown. The Court also noted that consistency in tax matters cannot override the rule that each assessment year is a separate cause of action, but the earlier binding view still controlled the controversy.

Conclusion: The assessee was not entitled to the higher rate of depreciation. The question was answered in favour of the Revenue and the Tribunal's order was reversed to that extent.

Final Conclusion: The appeal succeeded on the depreciation issue, while the other question was not pursued, and the tax appeal stood finally disposed of by applying the binding earlier precedent.

Ratio Decidendi: Higher depreciation on motor vehicles is admissible only when the vehicles are actually used in the business of running them on hire, and mere leasing out of vehicles does not satisfy that condition.

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