2003 (4) TMI 595 - HC - Income Tax

High Court orders Tribunal to re-examine income from lorry hiring

Commissioner of Income-tax Versus S.K. Mylsamy Gounder

The High Court remanded the case to the Tribunal for further inquiry to determine if the assessee had earned income from hiring lorries in the specified ... - Issues:- Validity of higher rate of depreciation claim without accounting for hire charges in assessment years 1985-86 and 1986-87.Analysis:1. The appeals before the Madras High Court involved the question of whether the assessee was entitled to a higher rate of depreciation of 40% without accounting for hire charges in the assessment years 1985-86 and 1986-87.2. The assessee, engaged in selling cattle feed and poultry products, also had a business of letting vehicles on hire. The assessing authority denied the 40% depreciation claim for lorries owned by the assessee as they were not used for hire purposes, unlike in previous years where hire charges were accounted for separately.3. The CIT(A) reversed the assessing authority's decision, stating that the vehicles were indeed used for hire purposes, without addressing the absence of hire income entry in the relevant years.4. The Tribunal upheld the assessee's claim based on evidence from subsequent assessment years and allowed the depreciation at 40% for both 1985-86 and 1986-87. The Revenue challenged this decision before the High Court.5. The Revenue contended that the assessing authority's distinction in the accounts of the relevant years was crucial, as no hire charges were claimed for 1985-86 and 1986-87, unlike in previous years. The CIT(A) and Tribunal were criticized for mechanically relying on past orders.6. The assessee argued that the lorries were used for hire when customers purchased products, supported by additional charges per bag. However, the High Court noted the lack of consideration by the lower authorities regarding the absence of hire income entries specifically for the years in question.7. Referring to a previous ruling, the High Court emphasized that the term 'hire' in the relevant entry denoted use by another party for a consideration, irrespective of the duration or nature of the agreement.8. The High Court concluded that a re-examination was necessary to determine if the assessee had indeed earned income from hiring the lorries. The matter was remanded to the Tribunal for further inquiry and possible evidence submission by the parties.9. Ultimately, both appeals were allowed, with a directive for re-evaluation on the income earned through hiring the lorries in the specified assessment years, emphasizing the need for a thorough review of the evidence.