1988 (6) TMI 78

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....r taxi on hire was carried on by the assessee..2. We have heard the learned representatives on both sides. 3. A few facts first. During the year under account, the assessee purchased a car and leased it out to M/s Jupudy Jagannadharao & Sons at a rental of Rs. 50 per day. Depreciation at the rate of 40 per cent was claimed on the car. The Income-tax Officer allowed it at 20 per cent. 4. On appeal, the learned Appellate Assistant Commissioner, Visakhapatnam whose order dated 22nd November 1985 is impugned before us held that the assessee was entitled to 40 per cent depreciation since the motor vehicle was given on hire. 5. It is this finding of the first appellate authority which is challenged before us by the revenue. 6. Shri Radhakrish....

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.... Entry E item (1A), it used the terminology 'motor taxis' used in a business of running them on "hire", which makes all the difference. 7. Having considered the rival submissions carefully, we are of the view that the learned Appellate Assistant Commissioner fell in a legal error when he applied the latter entry and granted depreciation of 40 per cent as the assessee's case falls within the purview of first entry entitling him only to get depreciation of 20 percent. We say so for the following reasons. 8. The assessee after purchasing a car leased it out only to one party on a rental of Rs. 50 per day. It is difficult to concur with the learned Appellate Asstt. Commissioner that this situation could be equated wherein a vehicle is used as....

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....uld be treated as a motor car or taxi. 10. In the present case what appears is that on the basis of a contract, the assessee agreed to give on hire a car at rental of Rs. 50 per day. Such a contract may be binding between the parties to it but it cannot take the character of something in return by which public at large would-be concerned with. As stated above, if a vehicle is not available for general hire nor registered properly as a taxi, we cannot it call it a taxi. 11. Coming to the legal position also, we agree with the learned departmental representative that where the Legislature intended to allow 40 percent depreciation, it used the words 'motor taxis' unlike in the other entry where it has used the term 'motor cars'. At this stag....