Tax appeal denied, leasing vehicles for consideration qualifies for higher depreciation

The court dismissed the tax case appeal, citing the decision in CIT v. Madan and Co. [2002] 254 ITR 445, which clarified that leasing out vehicles for a specified period for consideration qualifies for higher depreciation. The judgment emphasized that when an owner leases out vehicles and receives lease rentals, it constitutes usage of the vehicles in the business, entitling the owner to claim higher depreciation.

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Issues:
1. Disallowance of depreciation claim by the Assessing Officer.
2. Appeal by the assessee before the Commissioner of Income-tax (Appeals).
3. Confirmation of the appeal by the Income-tax Appellate Tribunal.
4. Appeal by the Revenue against the decision.
5. Interpretation of the term "hire" in relation to depreciation claim.
6. Application of the decision in CIT v. Madan and Co. [2002] 254 ITR 445.

Analysis:
The case involved a dispute regarding the depreciation claim of a company engaged in leasing out commercial vehicles on a hire purchase basis for the assessment year 2000-01. The Assessing Officer disallowed the depreciation claim at 40%, restricting it to 25% as the company had not utilized the commercial vehicles themselves. The Commissioner of Income-tax (Appeals) allowed the appeal in favor of the assessee, a decision upheld by the Income-tax Appellate Tribunal.

The Revenue challenged the decision, raising the question of whether an assessee leasing out vehicles without using them themselves is entitled to higher depreciation. The Revenue's counsel referred to the decision in CIT v. Madan and Co. [2002] 254 ITR 445, where it was clarified that the term "hire" denotes providing a vehicle to another for use for a limited period for consideration. The court in the cited case held that leasing out vehicles for a specified period for consideration qualifies for higher depreciation.

Based on the settled proposition from the referred case law, the court dismissed the tax case appeal, finding no substantial question of law requiring consideration. The judgment emphasized that when an owner leases out vehicles and receives consideration in the form of lease rentals, it constitutes usage of the vehicles in the business of running them on hire, entitling the owner to claim higher depreciation.

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