1. These cross appeals arise out of the order dated 10-9-1985 of the learned Commissioner of Income-tax (Appeals), Chandigarh for the A.Y.1982-83.
2. The assessee, who is an individual carries on transport business in the name and style of Bestways Transport Corpn., Faridabad. In the assessment year in question he plied five trucks and one taxi. The first ground in the assessee's appeal relates to the claim of depreciation on truck No. DEG 1363 (HRU 8316). The assessee had not claimed depreciation in the original return but only in the revised return filed on 25-3-1985. It was a 1982 model open truck which the assessee purchased on 17-2-82 from Pacos G.T. Karnal Road Kundli, District Sonepat for Rs. 2,30,180. He obtained permission on 18-3-1982 from the Secretary R.T.A. Paridabad for getting this vehicle inspected by the Board of Inspection. The body was constructed on the vehicle and then it was produced before the Board of Inspection on 19-9-82. However the Certificate of fitness was not issued and the fitness documents were impounded. The assessee therefore, filed a writ petition before the P & H High Court (CW No. 1594 of 1982) against (i) the Registering Authority ; (ii) Motor Vehicles Inspector, Gurgaon ; and (iii) the Secretay R.T.A. Paridabad. In terms of the interim order dated 3-5-82 of the High Court, the vehicle was again produced before the Board of Inspection on 7-5-82. Registration was ultimately granted to the vehicle w.e.f. 7-5-82 (on the basis of the inspection and fitness) on 19-3-85. The Registration was effected on 10-5-1985. The claim of depreciation was rejected by the Income-tax Officer on the ground that up to 31-3-82 since the vehicle was not registered, it could not be considered fit or 'Kept ready for use'. He held that the truck was neither in a position to be plied on the road by 31-3-1982 nor was it actually used during the previous year for the purpose of business.
3. In appeal the learned Commissioner of Income-tax (Appeals) upheld the order of the Income-tax Officer.
4. Sri Shashi Bhushan Gupta, the learned counsel for the assessee referring to the provisions of Section 32. Rule 5AA(v) and Form No. 2 submitted that though the asset had to be used for the purposes of the assessee's business, the expression "user" neither implied actual user nor any particular period of user. According to him the truck was kept ready for use and the fact that it was taken for inspection on 18-3-82 and 7-5-82 showed that the user Was there. He also relied upon the following1 decisions : - (vi) Famous Cine Laboratories & Studios Ltd. v. CIT [1980] 121 ITR 648 (Bom.); (vii) Capital Bus Service (P.) Ltd. v. CIT [1980] 123 ITR 404 (Delhi); (viii) CIT v. Vayithri Plantations Ltd. [1981] 128 ITR 675 (Mad.); and Referring to the decision of the Bombay High Court in Nowroji Jehangir Gamadia v. Dy. Collector AIR 1986 Bom. 373 he submitted that a liberal interpretation had to be given, On the other hand Smt. Archana Ranjan, the learned Departmental Representative strongly relied upon the orders of the income-tax authorities. She referred to the Commentary of Sampath lyengar at page 1263, Vol.11 (Seventh Edition) and the decision of Supreme Court in Challaplli Sugars Ltd. v. CIT [1975] 98 ITR 167 and submitted that the grant of depreciation was not a benefit. She also emphasized that user did not include "disuse" or the expression "not used".
5. We have considered the rival submissions 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 true that no particular period of user of the asset is required. In fact, as held by the Hon'ble Allahabad High Court in the cases of Niranjan Lal Ram Chandra (supra) and Capital Bus Service (P.) Ltd. (supra) 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 kept ready for use. A vehicle would be ready for use when 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 Vehicle 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 passengers or people unless the vehicle is registered in accordance with Chapter III and the Certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner. Section 123 of the Motor Vehicles Act, 1939 makes the contravention of Section 22, punishable.
It would not be right to say that the Motor Vehicles Act, 1939 does not prohibit the plying of the truck absolutely. The reason for which a fitness certificate or the grant of registration were withheld, is therefore not material. It is also noteworthy that in the present case taking out of the truck for purposes of inspection on 19-3-82 and 7-5-82 or for the purposes of having a body built thereon prior to the registration of the vehicle would not tantamount to the user of the same nor can it be said that it was for that reason, ready for use.
Though the truck was purchased on 17-2-82 (i.e., within the assessment year in question) the registration granted on 10-5-85 took effect only from 7-5-82 when the inspection was made in terms of the order of the P&H High Court. The registration did not take effect from 19-3-82 when the truck was first presented for inspection before the Board of Inspection by the assessee. These facts therefore, clearly establish that for the purposes of the claim of depreciation under Section 32 the truck in question could neither be said to have been used nor to have been kept ready for use for the purposes of the assessee's business during the assessment year in question. The present case was not a case of forced idleness as it was in the case of Vayithri Plantations Ltd. (supra). In the case of Malayalam Plantations Ltd. (supra) the Supreme Court was only considering the meaning of the expression "for the purpose of the business". It held that it had a scope wider than the expression "for the purpose of earning profits". In the case of Whittle Anderson Ltd. (supra) the Bombay High Court held that a machinery which had been kept idle but which was in working condition ready for use, could be said to be used. In the case of R. Kanakasabai (supra) the Supreme Court did hold that if in a taxing provision more than one reasonable interpretation were possible, the interpretation beneficial to the subject had to be adopted. If the asset has not at all been used for any part of the accounting year, no depreciation allowance can be claimed. The asset should have been used whether actively or passively atleast for a part of the accountingly year. We accordingly find no merit in this ground.
6 to 19. [These Paras are not reproduced here as they involve minor issues.]