TaxTMI 
TaxTMI 
2005 (8) TMI 82
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction on account of depreciation in respect of motor cars manufactured outside India which are acquired by the assessee after February 28,1975, in view of the second proviso to section 32(1)(ii)? Question No. 2: Whether in view of the findings reached by the Tribunal, the Tribunal was justified in holding that the vehicles in question were used in a business of running them on hire? Question No. 3: Whether, on the facts and circumstances of the case, the Tribunal was justified to hold that the assessee was engaged in the business of running the motor cars, manufactured inside India, on hire, so as to the assessee is entitled for higher rate of depreciation on such motor cars?" A common order was passed by the Tribunal for the asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the business of running the cars on hire, but it was only an activity incidental to run the business of hotel and, therefore, he is not entitled to claim depreciation on the cars manufactured outside India and owned by him nor additional depreciation in respect of other cars owned by him which were manufactured in India, though as business assets. The latter category of cars was subject to claim of depreciation at normal rates. The Commissioner of Income-tax (Appeals) had agreed with the findings of the Assessing Officer and rejected the claim of the assessee with respect to the depreciation or additional depreciation as the case may be. However, the Tribunal vide its order dated March 21, 2001 relevant to the assessment years 1990....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on payment of charges since the dominant purpose of the assessee is to run the business of hotel, and providing cars on hire is only incidental thereto, the assessee cannot be said to be running a business of running cars on hire for tourists. He has placed reliance on two decisions. One of the Madhya Pradesh High Court and the second is of the Delhi High Court namely ITC v. Anupchand and Co. reported in [1999] 239 ITR 466 (MP) and CIT v. Bansal Credits Ltd. reported in [2003] 259 ITR 69. On the other hand, learned counsel for the respondent-assessee has reiterated the arguments urged before the Tribunal and invited our attention to a decision of the Kerala High Court in CIT v. Dr. K.R. Jayachandran [1995] 212 ITR 637. Having give....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt business and incidental business of the assessee is not relevant. What is relevant is the conditions required for claiming benefit of deduction on account of depreciation on the cars manufactured outside India, i.e., imported cars, by the assessee are fulfilled, or the conditions for claiming additional depreciation as business assets are fulfilled. The condition is only one that such car must be used in the business of running it on hire for tourists or for business of running taxies. The hotel business is a major instrument of carrying on the business of tourism in India and the package of facility which it provides to the recipients are activities towards the tourism. The aforesaid circular had stated in no uncertain terms that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lear intention that it is running them on hire. The assessee has also referred to the fact and which is not denied that the respondent assessee is charging hire from the customers to use the vehicles for transportation, primarily which is being used for the hotel and for reaching the airport on checking out for leaving the place. The statutory provision nowhere puts a restriction that if a business is running on a restricted scale, the benefit could not be available. Therefore, it cannot be said that there was no evidence on the basis of which the Tribunal could reach its conclusion that the assessee has acquired the vehicles in question for running a taxi on hire and that the assessee has used the vehicle in question for running them on hi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the ambulance van is kept by the assessee for the purpose of being used on hire and it is so plied. The plying of the ambulance van on hire itself constitutes the business of the assessee though it may be incidental to the running of the hospital. It has also observed that one business can be advantageously combined with another business. In the case of the assessee the hire charges received by the assessee from the hire of the ambulance van are also assessed under the head "Business". Hence, the assessee is entitled to depreciation at the rate of 40 per cent. We do not see any reason to take a different view in this regard. The aforesaid decision fortifies the conclusion reached hereinabove. Learned counsel for the Revenue has rel....