TaxTMI 
TaxTMI 
2003 (4) TMI 29
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....ssible. The entry reads as under: "III. MACHINERY AND PLANT: (1) Machinery and plant other than those covered by sub-items (2) and (3) below, (2) (i) Aeroplanes-Aeroengines (ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire." Facts: A return of income was filed on October 6, 1989, by the assessee declaring its total income of Rs. 73,47,279 as profits under section 115J. The assessee is a leasing and financing company having its income from lease rent, bill discounting and service charges. During the course of hearing, certain issues were raised. One of the issues was concerning depreciation. The assessee had claimed 50 per cent. depreciation on trucks, buses and motor vans. This was disallowed. ....
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....at, the assessee did not run them on hire nor did it carry on the business of running them on hire. Hence, the Tribunal took the view that the claim of depreciation at 50 per cent. cannot be allowed. However, it was argued in the alternative by the assessee 1at even if the lessees of the assessee had used motor trucks, motor buses and motor vans in the business of running them on hire, the assessee was entitled to a higher rate of depreciation in view of the judgment of the Supreme Court in the case of CIT v. Shaan Finance (P.) Ltd. [1998] 231 ITR 308. This alternative contention of the assessee was accepted by the Tribunal subject to an enquiry by the Assessing Officer, who is directed to ascertain whether the motor trucks, motor buses and....
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....tor buses, motor lorries and motor taxis and these are let out to the lessees. That, merely because the assessee is a leasing and financing company cannot deprive the assessee of higher depreciation under the above entry. In this connection, he relied upon the judgment of the Madras High Court in the case of CIT v. Madan and Co. [2002] 254 ITR 445. He contended that the word "hire" used in the above entry was only to denote that the use of the vehicles is not by the owner himself for his own purposes but it is given to another for use for a limited period for consideration and for this purpose there was no qualitative difference between lease of the vehicles for a specified period for consideration and letting the vehicle on hire for a shor....
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....ed to the assessee for the assessment year 198889 and, therefore, it was incumbent on the Department to grant depreciation thereon to the assessee at the same rate in the assessment year in question, i.e., 1989-90. It was argued that once the said assets were found to be eligible for depreciation at a higher rate during the earlier years, they were to be regarded as separate and identifiable block of assets which were eligible for depreciation at the same rate in the subsequent years. He submitted that this alternative argument was not at all considered by the Tribunal. He, therefore, contended that the assessee was entitled to higher depreciation at 50 per cent. of the written down value and not at 33.33 per cent. In reply, Mr. R.V. Desai....
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....e higher depreciation was wrongly granted for the assessment year 1988-89, that did not bind the Department to grant the same depreciation for the assessment year 1989-90. He contended that the principles analogous to res judicata do not apply to income-tax proceedings. Findings: We do not find any merit in this appeal. There is a basic difference between "lease" and "hire". This difference is borne out by the basic difference in the meaning of the expression "property" and the expression "possession". A transaction of hire is essentially a contract of bailment of a vehicle. In the case of a hire, only a licence is given to the hirer to use the vehicle for a temporary period the vehicle so hired. In the case of hire, the hirer has an opti....