2014 (2) TMI 848

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....nd style of M/s. Pasco Automobiles which deals in sale of Maruti cars on commission basis. He also derives share income from two partnership firms which were dealing in the purchase and sale of Telco trucks. Since the issue upon which questions of law have been framed is the same in all the three years and since it has been discussed in detail in the order of the Tribunal for the assessment year 1986-87, the facts for that year may be noticed as illustrative for all the three years. In the return filed for that year, the assessee claimed depreciation of Rs.10,29,581/- in respect of the trucks. In the course of the assessment proceedings, the AO took the view that the claim of depreciation was a mere device to reduce the tax liability arising out of the commission earnings of Rs.36.02 lakhs on sale of Maruti cars and Rs.6.5 lakhs on sale of other vehicles. He noted that there was a steep ingress in the commission income compared to the earlier year in which it was only Rs.6.50 lakhs. On further investigation he found that the trucks on which the assessee had claimed depreciation were shown to have been acquired from the sister concern of the assessee and that too in the fag end of t....

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.... against the aforesaid orders of the Tribunal that the revenue has filed the present appeals. Though the orders for the assessment years 1987-88 and 1988-89 were passed on different dates, the issue has been mainly discussed by the Tribunal only in its order for the assessment year 1986-87. The revenue has filed appeals against the orders of the Tribunal for all the three years. 8. The main question, as indicated by the first substantial question of law framed by this Court is whether there was any material before the Tribunal to hold that the assessee let out the trucks on hire. So far as this aspect is concerned the discussion of the Tribunal is contained in paragraphs 6.19 to paragraph 6.31. A perusal of these paragraphs shows that the Tribunal has recorded a finding that the truck chassis were purchased on 03.03.1986 and 15.03.1986 for a total price of Rs.20.69 lakhs and the assessee got the body built on each truck at a cost of Rs.40,000/- each. Expenses were also incurred on transport of the truck chassis, registration charges, insurance charges, etc. and the total expenses came to Rs.25,73,952/-. These facts were not disputed before the Tribunal. The Tribunal has also not....

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....at the assessee was owner of the trucks cannot be disputed. 10. So far as the receipt of hire charges is concerned, one Vijay Kumar, Accountant of Bombay Okara Cargo Ltd. and Bombay Okara Carriers and Movers (Regd.) appeared before the Assessing Officer in response to the summons and produced the books of accounts and vouchers to show the payment of hire charges to the assessee. The relevant voucher numbers and the dates have been noted by the Tribunal in paragraph 6.22. The Tribunal has also noted that the assessee received the hire charges through cheques and they were in respect of the period 25.03.1986 to 31.03.1986 and 01.04.1986 to 07.04.1986. Vijay Kumar also confirmed that the trucks were taken on hire and were used for local transportation. An affidavit from Sardar Inder Singh, who was the Director of M/s. Bombay Okara Cargo Ltd. and the managing partner of M/s. Bombay Okara Carriers and Movers (Regd.) was also filed by the assessee as noted by the Tribunal and in this affidavit he deposed that in addition to their own trucks, they also hired trucks whenever necessary depending upon the need of their business. He further states in the affidavit that it is a regular feat....

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....een allowed. Even the loss on account of depreciation from running the trucks on hire was determined at Rs.2,95,089/- and allowed in that assessment year by an order passed on 24.01.1986 under Section 143(3). In the assessment year 1985-86 the assessee received truck hire charges of Rs.59,250/- and claimed depreciation of Rs.5,62,532/- as well as bank interest on loan at Rs.11,480/-. The aggregate amount of Rs.5,21,762/- was allowed as a loss in a scrutiny assessment made under Section 143(3) on 11.05.1987. In this year one more aspect which the Tribunal has noted is that the profit of sale of the trucks amounting to Rs.17,416/- was assessed under Section 41(2) as business income. Not only in those earlier years, but also in the assessment year 1986-87, the excess amount realised on sale of the trucks over the written down value, to the extent of depreciation already allowed at Rs.36,054/- was declared and assessed by the assessing officer under Section 41(2). 13. The Tribunal found it incongruous that on the one hand the assessing officer was consistently assessing the hire charges and also the profit on account of the sale of the trucks under Section 41(2) as business income, ....