TaxTMI 
TaxTMI 
2006 (7) TMI 125
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....alled "lessees"). In respect of these leased vehicles, the assessee claimed depreciation at 40 per cent, in terms of section 32 of the Income-tax Act read with rule 5 of the Income-tax Rules and Appendix I to the Rules. The Assessing Officer by his order dated March 12,1999, allowed depreciation at 20 per cent, while holding that the assessee had given the vehicles on lease to third parties, which is not the same as running them on hire by the assessee. Feeling aggrieved by the assessment order, the assessee preferred an appeal which was taken up for consideration by the Commissioner of Income-tax (Appeals). In his order dated December 6, 1999, the Commissioner of Income-tax (Appeals) upheld the allowance of depreciation at 20 per cen....
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....of the Gauhati High Court, it was held that the assessee would be entitled to depreciation at 40 per cent, in respect of the vehicles given on lease. Following the order passed in Goodwill India Ltd., the assessee in the present case was granted depreciation at 40 per cent, on the vehicles given by it on lease to third parties. As abovementioned, the Revenue challenged this conclusion of the Tribunal. On October 30, 2000, this appeal was admitted and the following question of law was framed: "Whether, the Income-tax Appellate Tribunal was right in law in directing the Assessing Officer to allow depreciation at 40 per cent, on the vehicles given on lease?" It is submitted on behalf of the Revenue that the assessee is not entitled to....
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....uld not be entitled to a higher rate of depreciation) or whether the assessee is using those vehicles in its business of hire by giving them out to third parties (in which case the assessee would be entitled to depreciation at a higher rate). Admittedly, there is no dispute that the assessee is the owner of the vehicles and there is also no dispute that the assessee leased out those vehicles to third parties. The only question, therefore, that is required to be considered by us is whether the assessee has utilised the vehicles for its own use, and if not whether the assessee would be entitled to depreciation at 40 per cent., as claimed by it. We have examined the matter in great detail after hearing learned counsel for the parties ....
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....eciation. In the present case, we do not find any such doubt having been raised at any stage of the proceedings by the Assessing Officer or by the Commissioner of Income-tax (Appeals) or even by the Tribunal. If the argument for the Revenue is looked at pragmatically, it would result in an impossible burden on the assessee who would have to keep track of all its vehicles leased out to third parties with a view to ascertain whether those third parties are in fact using those vehicles for hire or not. Consequently, we are of the opinion that the requirement, as laid down in Bansal Credits Ltd. [2003] 259 ITR 69 (Delhi) would be satisfied if there is material to show that the assessee in fact used those vehicles in its business of hiring or....