Commissioner of Income Tax vs S. Sudhakar

A. Subbulakshmy, J.—The assessee purchased a bus for a consideration of Rs. 1,50,000 on April 3, 1979, from Mariappa Bus Service and claimed depreciation on the entire purchase value in respect of the said bus. The Income Tax Officer did not allow depreciation on a sum of Rs. 30,000 representing one fifth of the sale consideration as the value of the route permit and treated the balance of Rs. 1,20,000 as the cost of the bus and he allowed depreciation to that extent. On appeal, the Appellate Assistant Commissioner directed the Income Tax Officer to allow the depreciation on the entire amount of Rs. 1,50,000 being the purchase consideration for the bus and allowed the assessee''s appeal. On further appeal, the Appellate Tribunal confirmed the order of the Appellate Assistant Commissioner and on that this reference has arisen.

At the instance of the Revenue, the following question has been referred to us :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the assessee was entitled to depreciation on the entire purchase price of the bus without apportioning a part of the cost towards the value of the route ?"

Counsel for the Revenue submitted that depreciation cannot be allowed on the route value and the orders passed by the Commissioner and the Tribunal are not in order. It is stated in the sale deed that the seller has transferred the route permit also along with the bus for a consideration of Rs.1,50,000.

Under the facts and circumstances, it is evident that the bus has been purchased by the assessee along with the route permit for a consideration of Rs. 1,50,000. The Income Tax Officer has considered Rs. 30,000 representing one fifth of the sale consideration as the value'' of route permit and he has allowed depreciation only to the extent of Rs. 1,20,000.

Counsel for the Revenue cited the decision in the case of G. Vijaya- ranga Mudaliar v. CIT [1963] 47 ITR 855 and submitted that depre ciation on the amount representing the value of the vehicle alone should be allowed and depreciation is not allowable on the amount representing the route permit. In the decision cited above, it has been held that the department should allow depreciation only on the amount representing the value of the vehicle and depreciation is not allowable on the amount representing the route permit value.

Following the above decision, we find that the assessee is entitled to depreciation only on the value of the bus and not on the entire purchase value and we answer the question in favour of the Revenue and against the assessee. No costs.