Depreciation on motor buses used on fixed routes limited to ordinary rate, not higher hire-vehicle allowance.

Motor buses plying on fixed routes and carrying passengers for separate fares were not treated as vehicles used in a business of running them on hire under the depreciation schedule. The higher rate applied only where the vehicle itself was let out on hire, such as chartered or contract buses, while ordinary stage-carriage buses fell within the lower residual rate. The schedule's wording was decisive, and reference to motor vehicle taxation rules or dictionary meanings did not expand the concession. The buses were therefore entitled only to depreciation at 33 1/3%, not 50%.

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Issues: Whether motor buses plying on fixed routes and carrying passengers for separate fares were entitled to depreciation at 50% as motor buses used in a business of running them on hire, or only at 33 1/3% as ordinary motor buses.

Analysis: The depreciation schedule in Appendix-I of the Income-tax Rules provided a higher rate only for motor buses, motor lorries and motor taxis used in a business of running them on hire, and a lower rate for motor buses and motor lorries other than those so used. The expression employed in the schedule was treated as material, because it referred to the bus being hired out as a vehicle, not merely to passengers paying fares for travel on fixed routes. Reference to the Karnataka Motor Vehicles Taxation Act, 1957 and dictionary meanings of hire did not alter the distinction drawn in the depreciation schedule between a vehicle plying for passengers and a vehicle actually let out on hire as such. The incentive was intended for transport operators who hire out the vehicle itself, such as chartered or contract buses, and not for ordinary stage-carriage buses running on regular routes.

Conclusion: The buses were not used in a business of running them on hire and were therefore entitled only to depreciation at 33 1/3%, not at 50%.

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