Advance tax refund interest and motor van depreciation turned on precedent and vehicle classification for tax treatment.

Interest on an advance tax refund under section 214 was stated to follow the governing precedent on the stage from which the refund arose, with the reference resolved against the taxpayer on that point. Depreciation for a motor van was treated as different from the rate applicable to a motor car because the vehicle was materially distinct on physical and tax characteristics, so the higher depreciation rate was upheld for the assessee. The note thus highlights that refund interest depends on the controlling authority, while depreciation rates must reflect the true class of the vehicle.

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Issues: (i) Whether interest under section 214 of the Income-tax Act was payable on the advance tax refund arising from the Appellate Assistant Commissioner's order rather than the original assessment order; (ii) whether depreciation on a motor van was allowable at 30% instead of 20% as applicable to a motor car.

Issue (i): Whether interest under section 214 of the Income-tax Act was payable on the advance tax refund arising from the Appellate Assistant Commissioner's order rather than the original assessment order.

Analysis: The answer to this question was governed by the binding Full Bench decision in CIT v. Carona Sahu Co. Ltd., and the question was therefore resolved on that authority.

Conclusion: The question was answered in the negative and in favour of the Revenue.

Issue (ii): Whether depreciation on a motor van was allowable at 30% instead of 20% as applicable to a motor car.

Analysis: The motor van was found not to be equated with a motor car, regard being had to its greater horsepower, axle weight, and higher tax incidence, and the Tribunal's allowance of depreciation at 30% was upheld.

Conclusion: The question was answered in the affirmative and in favour of the assessee.

Final Conclusion: The reference was disposed of by answering one question for the Revenue and the other for the assessee, with no order as to costs.

Ratio Decidendi: Where a vehicle is materially distinct from a motor car on relevant physical and tax characteristics, it cannot be mechanically subjected to the motor-car depreciation rate; and interest on advance tax refund follows the governing precedent applicable to the stage from which the refund arises.

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