Depreciation on hired trucks and purchase genuineness turned on factual verification, while broken-stone disallowance was deleted.

Higher depreciation on lorries depends on whether the assessee was carrying on a truck-hiring business, not merely on the inclusion of hire income; the matter was remitted for fresh factual examination. Disallowance for iron and steel purchases could not be sustained without verifying whether the photocopies of bills were authenticated by sellers and supported by account payee cheques; the issue was restored for verification, with deletion directed if authenticity was proved. For broken-stone purchases, typewritten or handwritten slips, supplier confirmations, and cheque payments were held sufficient to support genuineness, so insistence on printed bills was unwarranted and the disallowance was deleted.

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Issues: (i) whether higher depreciation at 40% on lorries was admissible when the vehicles were used both in the assessee's own business and for hire; (ii) whether disallowance of purchase of iron and steel for non-production of original bills was justified; (iii) whether disallowance of part of purchases of broken stones could be sustained for want of proper printed bills.

Issue (i): whether higher depreciation at 40% on lorries was admissible when the vehicles were used both in the assessee's own business and for hire

Analysis: The relevant test under the depreciation schedule is whether the assessee was in the business of hiring out the trucks, and not merely whether some hire income was included in business income. The record did not contain sufficient material to determine whether the assessee was carrying on a hiring business in addition to contract work. In view of the controlling principle stated by the Supreme Court, the matter required fresh examination on facts.

Conclusion: The issue was remitted to the Assessing Officer for fresh adjudication.

Issue (ii): whether disallowance of purchase of iron and steel for non-production of original bills was justified

Analysis: The assessee had not produced the original bills, but the claim was that photocopies were authenticated by the sellers and payments were made through account payee cheques. Such authentication, if established, would support genuineness of the purchases. Since the factual verification was incomplete and the relevant photocopies were not before the Tribunal, the matter required verification by the Assessing Officer.

Conclusion: The issue was restored to the Assessing Officer for verification, with direction to delete the disallowance if the bills were found to be authenticated by the sellers.

Issue (iii): whether disallowance of part of purchases of broken stones could be sustained for want of proper printed bills

Analysis: The evidence showed that the trade dealt in broken stones on the basis of typewritten or handwritten slips, and the suppliers largely confirmed the transactions. Payments were mostly made by cheque and the available slips supported the purchases. In such circumstances, insistence on printed bills was unwarranted and the genuineness of the purchases was sufficiently supported by the material on record.

Conclusion: The disallowance of purchases of broken stones was deleted.

Final Conclusion: The appeal was disposed of in favour of the assessee on the substantive claims, with remand on two issues for fresh verification and deletion of the broken-stones disallowance.

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