Higher depreciation on leased trucks requires business use for hiring vehicles; mere lease to another party is insufficient.

Higher depreciation on a truck is available only where the statutory user condition is met, namely that the vehicle is used in a business of running motor lorries on hire. Mere leasing of the truck to another party does not satisfy that requirement if the assessee is not itself engaged in the business of hiring vehicles or transportation by hire. Applying binding precedent and the Supreme Court's approach to the depreciation entry, the Gujarat HC held that the assessee was not entitled to the 50% rate. The remand order was set aside and the Revenue's position was accepted.

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Issues: Whether higher depreciation at 50% was allowable on a truck given on lease when the assessee was not itself engaged in the business of running vehicles on hire.

Analysis: The claim for the higher rate of depreciation depended on the vehicle satisfying the condition in the relevant depreciation entry that motor buses, motor lorries and motor taxis must be used in a business of running them on hire. The Court held that the controlling test was whether the assessee was engaged in the business of hiring the vehicles or transportation by hire, and not merely whether the truck was leased to another party. The issue was treated as covered by earlier binding precedent and the Supreme Court's reasoning that the assessee must satisfy the statutory user condition for the higher allowance.

Conclusion: The assessee was not entitled to the higher depreciation rate. The remand order was set aside and the Revenue's stand was accepted.

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