Commercial vehicle depreciation and business travel disallowance resolved in favour of the assessee on rule-based and evidentiary grounds

Depreciation at 50% was allowable on motor cars treated as new commercial vehicles because the depreciation schedule linked the term "commercial vehicle" to the statutory definition of light motor vehicle, and the cars were purchased within the prescribed period, used for business, and fell within that definition. The condition of use for hire was not part of the relevant rule. An ad hoc disallowance of foreign travelling expenses was unsustainable because the travel was accepted as business-related and the record did not show personal or non-business use. The additions on both grounds were set aside.

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Issues: (i) Whether the assessee was entitled to depreciation at 50% on the motor cars treated as new commercial vehicles; (ii) Whether the ad hoc disallowance of foreign travelling expenses was justified.

Issue (i): Whether the assessee was entitled to depreciation at 50% on the motor cars treated as new commercial vehicles.

Analysis: The rate of depreciation depended on the specific entries in the depreciation schedule. The expression "commercial vehicle" in the relevant appendix included light motor vehicles as defined in section 2 of the Motor Vehicles Act, 1988. The cars were purchased within the prescribed period, were used for business, and their weight brought them within the definition of light motor vehicle. The condition that the vehicle must be used for hire was not part of the relevant rule. The authority therefore preferred the rule-based definition over dictionary meanings.

Conclusion: The issue was decided in favour of the assessee and depreciation at 50% was allowable.

Issue (ii): Whether the ad hoc disallowance of foreign travelling expenses was justified.

Analysis: The foreign travel was accepted as business-related and the record did not show that the expenditure was for personal purposes. Once the business purpose of travel was accepted, a lump-sum disallowance could not be sustained without material showing non-business expenditure. The disallowance was therefore unsupported by the record.

Conclusion: The issue was decided in favour of the assessee and the disallowance was deleted.

Final Conclusion: The appeal succeeded and the additions made on both grounds were set aside.

Ratio Decidendi: Where a depreciation entry defines "commercial vehicle" by reference to the statutory definition of light motor vehicle, the specific rule governs the allowance of depreciation, and an ad hoc disallowance of business expenditure cannot stand without evidence of personal or non-business use.

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