Tribunal Upholds 30% Bus Depreciation for Public Transport

The Tribunal dismissed the Revenue Department's appeal and upheld the decision that the assessee could claim depreciation at 30% on buses used for public transport. The Tribunal found that there is an implied contract of hire between passengers and the bus owner when using public transport, entitling the buses to the higher depreciation rate. Previous judgments and the nature of the business supported this conclusion, leading to the rejection of the Revenue's arguments.

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Issues Involved:
1. Whether there is a difference between hiring out a vehicle for a specified period and letting a passenger travel in a vehicle on payment of charges.
2. Whether the assessee was entitled to claim depreciation at 30% or 15% on buses used for its own business.

Detailed Analysis:

Issue 1: Difference between Hiring out a Vehicle and Letting a Passenger Travel
The Revenue Department argued that the Ld. CIT(A) erred in holding that there is no difference between hiring out a vehicle for a specified period and letting a passenger travel in a vehicle on payment of charges. The Revenue contended that a passenger traveling in a bus purchases only a right to travel between fixed points as per terms and conditions of the transporter, whereas in the case of hiring out a vehicle, one person grants to another the enjoyment of things during a certain time for stipulated compensation without interference of the owner.

The Ld. CIT(A) and the Tribunal, however, found that there is an implied contract of hire when passengers use public transport, which entitles the buses to a higher rate of depreciation. The Tribunal referred to the definitions of "contract carriage" and "stage carriage" under the Motor Vehicle Act, 1939, which support the view that buses used for public transport are effectively hired by passengers. The Tribunal cited various judgments, including those from the High Court of Kerala and ITAT Madras Bench, to support this interpretation.

Issue 2: Entitlement to Depreciation Rate
The core issue was whether the assessee was entitled to claim depreciation at 30% on buses used for its own business or if it should be restricted to 15%. The Assessing Officer (AO) had restricted the depreciation claim to 15%, arguing that the buses were used for the assessee's own business and not for hire.

The assessee contended that the buses were used for public transport and thus qualified for a higher depreciation rate of 30%. The Ld. CIT(A) accepted this argument, noting that the buses were registered under the Motor Vehicle Act and used for transporting passengers, which qualifies them for a higher depreciation rate. The Tribunal upheld this view, emphasizing that the nature of the business involved an implied contract of hire between the passengers and the bus owner.

The Tribunal also referred to previous judgments, including those from ITAT Amritsar and ITAT Chandigarh Bench, which supported the higher depreciation rate for buses used in public transport. The Tribunal concluded that the buses used by the assessee for public transport indeed qualify for a higher depreciation rate of 30%, as they are effectively hired by passengers, even if for short durations.

Conclusion:
The appeal by the Revenue Department was dismissed. The Tribunal upheld the Ld. CIT(A)'s decision that the assessee was entitled to claim depreciation at 30% on buses used for public transport, as there is an implied contract of hire between the passengers and the bus owner. The Tribunal found no merit in the Revenue's arguments and concluded that the order passed by the Ld. CIT(A) was based on sound logic, reasons, and relevant judgments.

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