Road transport vehicle interpretation under section 32AB denied deduction for business motor cars

Motor cars used for business were treated as road transport vehicles for purposes of section 32AB, because the expression was read in its ordinary sense and not controlled by the inclusive definition of plant in section 43(3) or by the Motor Vehicles Act. As section 32AB excludes road transport vehicles from the deduction base, the assessee's motor cars were held ineligible for deduction. Earlier income-tax decisions treating motor cars as road transport vehicles were also noted in support of this construction.

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Issues: Whether motor cars purchased and used by the assessee for business purposes qualified as road transport vehicles so as to be excluded from deduction under section 32AB of the Income-tax Act, 1961.

Analysis: Section 32AB allows deduction in respect of plant and machinery but excludes office appliances and road transport vehicles. Although section 43(3) of the Income-tax Act, 1961 contains an inclusive definition of plant that includes vehicles, that definition operates only where the context permits. The term road transport vehicle is not defined in the Income-tax Act, 1961, and the corresponding terminology in the Motor Vehicles Act, 1939 does not control its meaning for income-tax purposes. The expression was therefore construed in its ordinary and commonly understood sense. On that basis, a motor car is a vehicle that transports men and material on roads and falls within the expression road transport vehicle. The court also noticed the treatment of motor cars as road transport vehicles in earlier income-tax decisions.

Conclusion: The assessee's motor cars were road transport vehicles and did not qualify for deduction under section 32AB of the Income-tax Act, 1961. The disallowance was upheld and the appeal failed.

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