Depreciation on leased vehicle used by a single hirer allowed only as a motor car, not as a taxi on hire.

A leased vehicle given under a private contract to a single hirer was not treated as a motor taxi used in a business of running it on hire because it was not shown to be available for general public hire and lacked taxi registration or other indicia of taxi use. The depreciation entry for motor taxis applies only where the vehicle answers that hire-based use; here, the vehicle fell within the motor car category. Depreciation was therefore allowable at 20% and not at 40%.

---

---

Issues: Whether the assessee's leased car, given on hire to a single party and not registered as a taxi, was entitled to depreciation at 40% as a motor taxi used in a business of running it on hire, or only at 20% as a motor car.

Analysis: The applicable depreciation rates were differentiated in Appendix I to the Income-tax Rules, 1962 between motor cars and motor taxis used in a business of running them on hire. The vehicle in question was let out under a private contract to one party at a fixed rental and was not shown to be available for general public hire. The absence of taxi registration and related indicia reinforced the conclusion that it was not being used as a taxi. The distinction drawn by the rules was treated as intentional, reflecting greater wear and tear in vehicles used as buses, lorries, or taxis, as compared with private cars.

Conclusion: The assessee was not entitled to 40% depreciation; the vehicle fell under the motor car entry and depreciation was allowable only at 20%.

Ratio Decidendi: A vehicle leased to a single hirer is not treated as a motor taxi used in a business of running on hire unless it is available for general hire and answers the relevant taxi use contemplated by the depreciation entry.

---