Ashoka Stone Crushing Industries vs Income-Tax Officer.
1989 Latest Caselaw 165 Del

ORDER

Per V. P. Elhence, Judicial Member - The assessed is aggrieved of the order dated 5-3-1986 of the learned Appellate Asstt. Commissioner for the assessment year 1981-82.

2. The only question involved in this appeal is whether the assessed was entitled to claim depreciation in respect of a truck. The facts, which are not in dispute are as follows. The assessed firm purchased a truck chassis on 12-2-1981 for Rs. 1,84,261 where after insurance was paid was paid on 29-2-1981. It was made into an half truck through Shri Ali Sher s/o Abdul Majid who completed that job by 14-3-1981, i.e., within the accounting period relevant to the assessment year in question. The fitness certificate was however issued in April 1981, taxes were paid on 28-4-1981 and registration No. HRG 9506 was allotted to it by the concerned Transport Authority of Haryana only in May 1981 i.e., after the close of the accounting period relevant to the assessment year in question. However, even then the assessed claimed depreciation on this truck @30 per cent amounting to Rs. 55,278. The case set up by the assessed was that in fact the said truck was plied for 2 days during the assessment year in question i.e., on 29th & 30th March, 1981 by Shri R. P. Mauji, a Contractor of Ferozepur-Jhirka, who hired it from the assessed for this purpose. The assessed filed an affidavit dated 14-12-1983 of Shri Mauji whose statement was also recorded by the Income-tax Officer on 30-12-1984. The assessed had also filed an affidavit of the body-builder Shri Ali Sher of Palwal wherein he had deposed that he had charged Rs. 15,000 for the work which included Rs. 221.25, the cost of 125 litres of diesel for testing etc. and for carrying the truck from Palwal to Ferozepur-Jhirka. However, the Income-tax Officer took the view that the truck in question was not used the assessed prior to 31-3-1981. He disbelieved the affidavit of Shri Mauji. In this connection, he was also influenced by the fact that in the account of this truck, purchase of diesel for Rs. 308 was debited only on 12-4-1981, miscellaneous expenses of Rs. 15 were debited on 15-5-1981 and salary of driver amounting to Rs. 750 was also debited on 6-5-1981 i.e., all after the close of the accounting period relevant to the assessment year. He also observed that no receipts in support of the income from the truck were shown by the assessed during the accounting period relevant to the assessment year under consideration. He, therefore, rejected the claim of depreciation.

3. In appeal, the learned Appellate Asstt. Commissioner upheld the order of the Income-tax Officer. The assessed had filed before the learned AAC a certificate dated 7-5-1985 from the Truck-operators Goods Transport Union, Ferozepur-Jhirka (Gurgaon) regarding the registration of the truck in question with them in the last week of March 1981. He noticed that assessed had two other trucks Nos. HRG 9099 and HRG 9432 and it may have used truck No. 9432 for transporting the material. He also disbelieved the affidavit and statement of Shri Mauji who was not maintaining any books of account.

4. Before us on behalf of the assessed Shri J. P. Jain, Advocate, reiterated the submissions made on behalf of the assessed before the Income-tax authorities vide written submissions. He also relied upon the following decisions :

(1) Whittle Anderson Ltd. v. CIT [1971] 79 ITR 613 (Bom);

(2) Capital Bus Service (P.) Ltd. v. CIT [1980] 123 ITR 404 (Delhi); and

(3) CIT v. O. P. Khanna & Sons [1983] 140 ITR 558 (Punj. & Har.).

He submitted that no income from the truck in question could be shown in the account books in the relevant accounting year because Shri Mauji had made payments of Rs. 300 and Rs. 500 only on April 3rd and 4th, 1981. He submitted that even though under the Motor Vehicles Act, a truck could not be plied unless fitness certificate of the provisions of the said Act but that that would only make the assessed punishable under the provisions of the said Act. He submitted that on the basis of the affidavits filed by the assessed it was amply established that as a matter of fact the truck was plied on March 29th and 30th, 1981 and therefore, depreciation was allowable to the assessed. He submitted that even if it be assumed that the truck was not use for the purpose of business, it was ready for use in the month of March 1981, and depreciation was, therefore, allowable. On the other hand, Shri T. K. Shah, the learned Departmental Representative strongly relied upon the orders of the Income-tax authorities as also on the decision of the Supreme Court in the case of Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265 wherein the words "used for the purposes of the business" in section 10(2) (iv) of the Indian Income-tax Act, 1922, had been explained.

5. We have carefully considered the rival submission as also the decisions referred to above. The requirements of section 32 have to be satisfied before the claim of depreciation can be allowed. It is that no particular period of user of the asset is required. In fact the vehicle need not be plied daily and though there may be periods of non-plying, what is essential is that the vehicle should be ready for use and it is fit and though waiting to be put into motion, there is no legal impediment to its being put on the road and to be run. Section 22 of the Motor Vehicles Act, 1939 clearly enjoins that no person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place for the purpose of carrying the passengers or people unless the vehicle is registered in accordance with Chapter III and the certificate of the registration of vehicle not been suspended or cancelled and the vehicle carries the registration mark displayed in the prescribed manner Section 123 of that Act makes the contravention of section 22 punishable. Thus the Motor Vehicles Act, 1939 prohibits the plying of the truck absolutely. The taking out of the truck for the purposes of having built thereon or for test prior to its registration would not tantamount to the user of the same not can it be said that it was, for that it was, for that reason, ready for use. Though the truck was purchased on 12-2-1981 (i.e. within the assessment year in question), the fitness certificate was granted only in April, 1981 and the registration was granted in May 1981. These facts therefore, clearly establish that for the purpose of claim of depreciation under sec. 32 the truck in question could neither be said to have been used not to have been kept ready for use for the purposes of the assesseds business during the assessment year in question. The truck had to be used whether actively or passively at least for a part of the accounting year.

6. We next come to the other submission of the assessed that the truck was in fact plied on 29th and 30th March, 1981. Shri R. P. Mauji, the contractor who purported to have hired the truck in question from the assessed does not maintain any accounts. There is no documentary evidence of the hiring of the truck by him from the assessed. The certificate dated 7-5-1985 of the Truck Operators Goods Transports Union produced by the assessed before the AAC was to the effect that one truck of the assessed was booked by the Union as permanent member for carriage purposes and that though it was booked on 27-3-1981, there was no carriage work allotted to the truck during 29th, 30th and 31st March, 1981. The certificate is also to the effect that as per its general rule no truck could work without its permission in Ferozepur-Jhirka except for carrying building material i.e., stone, dust. Rori and sand. This certificate does not actually assist the assessed. Shri Mauji not only did not maintain any books of account but also no diary regarding hiring. No receipt was obtained by him for the truck. It also does not stand to reason that when the assessed was having two other trucks which had registration numbers and which were being plied, why the assessed would have given the unregistered truck to Shri Mauji for which even the fitness certificate had not been obtained. The affidavits and statement of Shri Mauji is therefore make-believe and does not inspire confidence. There is no evidence as was sought to be contended on behalf of the assessed before the learned Appellate Asstt. Commissioner in its letter dated 20th January, 1986 that the assesseds Commissioner in its letter dated 20th January, 1986 that the assesseds other truck No. HRG 9099 worked only up to 21-3-1981 and that the other truck No. HRG 9432 was not in a working condition during the entire period. The other factors which rendered the evidence of Shri Mauji unreliable are that even though the assesseds system of accounting is mercantile, 1981 were brought in its account books. It is also not believable that Shri Ali Sher who had fabricated the body on the truck had put in any diesel in the truck. No receipt was produced in respect thereof before the Income-tax Officer. We have already mentioned that the first bill of diesel debited to the truck account was dated 12-4-1981 and miscellaneous expenses were debited on 15-5-1981 whereas taxes amounting to Rs. 375 had been paid on 28-4-1981. Another factor which also needs to be noticed is that the salary of the driver amounting to Rs. 750 was debited only on 6-5-1981 and without the driver, the question of giving the truck on hire to Shri Mauji would not have arisen. As we have already mentioned above, it does not stand to reason that the new truck would have been put on the road or given on hire when two other trucks belonging to the assessed were available. There is no evidence of any extraordinary circumstances necessitating this unusual course of action. On the basis of the evidence on the record, we are therefore of the view that this was merely an attempt on the part of the assessed for claiming depreciation. The claim was clearly disallowable on facts and the orders of the income-tax authorities do not warrant any interference.

7. In the result, the appeal filed by the assessed fails and is dismissed.