THE PR.COMMISSIONER OF INCOME TAX-2 CHANDIGARH vs. M/S TAJ TRAVELS PVT LTD F-77 1ST FLOOR CIVIL LINE BATHINDA

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ITA/101/2018HC Punjab & HaryanaPHHC01118936201822 July 2019Author: MR. JUSTICE AJAY TEWARI,MR. JUSTICE HARNARESH SINGH GILL4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the Assessee is entitled to claim 30% depreciation on the buses. The Court found the interpretation adopted by the Assessing Officer to be unnatural and illogical. The phrase 'Motor buses, motor lorries and motor taxis used in a business of running them on hire' was interpreted to mean that the business itself is the operation of these vehicles for hire. The Court reasoned that the business of running buses, lorries, and taxis inherently means running them for hire, as otherwise, they would merely be for the assessee's own use and not a business. Therefore, the natural and correct interpretation is that assessees engaged in the business of operating automobiles for hire are eligible for higher depreciation. The Court found no fault with the orders of the Tribunal and dismissed the Revenue's appeals.

What were the facts?

The appeals were filed by the Principal Commissioner of Income Tax-2, Chandigarh (Revenue) against M/s Taj Travels Pvt. Ltd. (Assessee) concerning Assessment Years 2010-11, 2011-12, 2012-13, and 2013-14. The core issue revolves around the depreciation rate applicable to buses owned by the Assessee and operated on hire. The Assessee claimed 30% depreciation under Appendix I, item III(3)(ii), which pertains to motor buses used in a business of running them on hire. The Assessing Officer disallowed this, interpreting the provision to apply only to businesses that hire out buses, not those that own and operate them on hire. The Commissioner (Appeals) and the Income Tax Appellate Tribunal (ITAT) allowed the Assessee's claim, leading to the Revenue's appeals to the High Court.

What were the issues?

1. Whether the Assessee is entitled to claim 30% depreciation on buses owned and run on hire, as per Appendix I, item III(3)(ii) of the Income Tax Act, 1961, for the Assessment Years 2010-11 to 2013-14? (Question of law) Assessee's Contention: The Assessee contended that they are entitled to 30% depreciation as their buses are used in a business of running them on hire, aligning with the specific provision for such vehicles. They relied on the interpretation that 'running them on hire' refers to the business activity of operating buses for customers, irrespective of whether the buses are owned or taken on hire. Revenue's Contention: The Revenue argued, through the Assessing Officer's initial disallowance, that the provision for 30% depreciation applies only to businesses that take buses on hire, not to those that own and operate buses for hire. They interpreted the phrase 'Motor buses... on hire used in a business of running them' to mean that the 'hire' aspect modifies the 'business of running them', implying the business itself is about hiring out vehicles.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision : 22.07.2019

The Pr. Commissioner of Income Tax-2, Chandigarh ...... Appellant versus M/s Taj Travels Pvt. Ltd., F-77, 1st Floor, Civil Line, Bathinda. ...... Respondent

ITA No.102 of 2018 (O&M) The Pr. Commissioner of Income Tax-2, Chandigarh ...... Appellant versus M/s Taj Travels Pvt. Ltd., F-77, 1st Floor, Civil Line, Bathinda. ...... Respondent

ITA No.109 of 2018 (O&M) The Pr. Commissioner of Income Tax-2, Chandigarh ...... Appellant versus M/s Taj Travels Pvt. Ltd., F-77, 1st Floor, Civil Line, Bathinda. ...... Respondent POOJA SHARMA 2019.08.01 12:43 document

ITA No.170 of 2018 (O&M) The Pr. Commissioner of Income Tax-2, Chandigarh ...... Appellant versus M/s Taj Travels Pvt. Ltd., F-77, 1st Floor, Civil Line, Bathinda. ...... Respondent CORAM : HON'BLE MR.JUSTICE AJAY TEWARI HON'BLE MR.JUSTICE HARNARESH SINGH GILL *** Present : Mr. Vivek Sethi, Advocate for the appellant.

*** AJAY TEWARI, J. (Oral)

This order shall dispose of the above mentioned four appeals. Since common questions of law and facts are involved therein, they are being decided by this common order. For the sake of convenience the facts are being taken from ITA No.101 of 2018. 2. ITA No.101 of 2018 has been filed under Section 260A of the Income Tax Act, 1961 (for short 'the Act') against the order of the Income Tax Appellate Tribunal Division Bench Amritsar, dated 23.08.2017 in ITA No.427(Asr)/2016 for the Assessment Year 2012- 2013. 3. ITA No.102 of 2018 has been filed under Section 260A of the Income Tax Act, 1961 (for short 'the Act') against the order of the Income Tax Appellate Tribunal Division Bench Amritsar, dated 18.09.2017 in ITA No.503(Asr)/2016 for the Assessment Year 2013- 2014. POOJA SHARMA 2019.08.01 12:43 document

ITA No.170 of 2018 has been filed under Section 260A of the Income Tax Act, 1961 (for short 'the Act') against the order of the Income Tax Appellate Tribunal Division Bench Amritsar, dated 23.08.2017 in ITA No.426(Asr)/2016 for the Assessment Year 2011- 2012. 5. And ITA No.109 of 2018 has been filed under Section 260A of the Income Tax Act, 1961 (for short 'the Act') against the order of the Income Tax Appellate Tribunal Division Bench Amritsar, dated 23.08.2017 in ITA No.425(Asr)/2016 for the Assessment Year 2010- 2011. 6. These appeals have been filed against the orders of the Tribunal allowing 30% depreciation to the Assessee for the buses which were owned by it and were being run on hire.

The Assessee had claimed 30% depreciation in terms of New Appendix I (effective from assessment year 2006-2007 onwards), as per item No.III (3) (ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire.

The Assessing Officer disallowed the depreciation holding that this would be applicable only to such businesses who had taken the buses on hire. Thus the manner in which the Assessing Officer read the provision would be as follows :- 'Motor buses, motor lorries and motor taxis on hire used in a business of running them.'

The Assessee filed an appeal and the same having been allowed the Revenue approached the Tribunal. The Tribunal having dismissed the appeal of the Revenue, it is before us in these appeals. A POOJA SHARMA 2019.08.01 12:43 document bare perusal of item No.III (3) (ii) quoted above makes it clear that the interpretation given by the Commissioner and the Tribunal is correct and natural while that sought to be given by the Assessing Officer is most unnatural and really makes the provision un-meaning because then it would imply that an Assessee is using the motor buses/ motor lorries and motor taxies in a business of running. We asked the learned counsel for the appellant what the business of running of buses, lorries and taxies would be? He is not in a position to deny that the business of running buses, lorries and taxies can only be for hire because in every other case such vehicles would be only utilized for use of assessee and not for a business. Thus the natural meaning of the phrase would apply in the present case and those Assessees who are running automobiles for hire would be liable to claim a higher depreciation than those whose automobiles are meant for their use.

10.

In the circumstances of the case, we are not able to find any fault with the judgment and orders of the Tribunal. No other question of law arises.

11.

Since the main cases have been dismissed, the pending C.M. Applications, if any, also stand disposed of. (AJAY TEWARI) JUDGE (HARNARESH SINGH GILL) JUDGE July 22, 2019 pooja sharma-I Whether speaking/reasoned Yes/No Whether Reportable : Yes/No POOJA SHARMA 2019.08.01 12:43 document

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