Passenger transport buses treated as used on hire for higher depreciation where fares are paid by passengers.

Passenger buses operating on fixed routes as public transport were treated as buses used on hire for higher depreciation purposes. The Tribunal followed its earlier view in the assessee's own case and held that an implied contract of hire arises when passengers pay separate fares for carriage on a route, so the distinction between a vehicle hired for a period and a stage carriage was not material. Relying on the Motor Vehicles Act definitions of stage carriage and contract carriage, and supporting case law, it concluded that the higher depreciation rate applied and the Revenue's challenge failed.

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Issues: Whether buses operated in passenger transport service were buses used on hire for the purpose of higher depreciation under the income-tax depreciation schedule.

Analysis: The Tribunal followed its earlier decision in the assessee's own case for prior assessment years and held that passenger buses plying on fixed routes carry passengers under an implied contract of hire. The distinction between a vehicle hired for a period and a public transport bus carrying passengers on payment of separate fares was found not to be material for depreciation purposes. The Tribunal also relied on the definitions of stage carriage and contract carriage under the Motor Vehicles Act and on earlier judicial decisions supporting the view that such buses are used on hire.

Conclusion: The assessee was entitled to depreciation at the higher rate and the Revenue's challenge failed.

Final Conclusion: The order allowing higher depreciation was upheld and the Revenue's appeal was dismissed.

Ratio Decidendi: Passenger buses plying as public transport under an implied contract with passengers are treated as buses used on hire for the purpose of the higher depreciation rate.

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