J.P. Raju vs Asstt. >Commissioner of Income Tax, Special Circle, Division 1, Thiruvananthapuram

Ramachandran Nair, J.

This is an appeal filed by the assessee u/s 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal confirming disallowance of depreciation claimed by the assessee for lorries and taxi. It is seen that depreciation of Rs. 1,86,891 claimed by the assessee on lorries owned and operated by him was disallowed by the assessing officer on the ground that assessee did not maintain any books of account, but returned income from lorry business only on estimation basis. In fact, it is seen from the records that assessee returned net income from lorry business at the rate of Rs. 750 per month for one truck and at the rate of Rs. 5,000 per month for another truck and at the rate of Rs. 1,250 per month from taxi service. On a net income of Rs. 69,000 the assessee claimed depreciation of Rs. 1,89,891 and computed a net loss of Rs. 82,490. The assessee claimed exemption of income towards share received from partnership firms. In the assessment, the assessing officer rejected the assessee''s claim for depreciation but estimated the net income from lorry operation for the whole year at Rs. 17,625 and from taxi service at Rs. 2,500. In appeal filed by the assessee against assessment, the CIT (A) allowed the appeal and directed the Officer to grant depreciation based on accounts maintained by the assessee. Against this the department filed appeal before the Tribunal and assessee filed cross-objection. Though the Tribunal gave postings on several days, the assessee was absent repeatedly and therefore the appeal was disposed of by the Tribunal on merits after perusing the records and after hearing the department which was appellant before it.

Even though counsel for the assessee contended that the assessee should be given another opportunity before the Tribunal, we are not inclined to grant the request for two reasons. In the first place, from the number of postings noted in paragraph 8 of the Tribunal''s order, we feel the assessee deliberately did not want to appear before the Tribunal and argue the matter, probably because of inherent weakness of the case. Secondly, we find the Tribunal''s decision is rendered on facts admitted by the assessee and even if an opportunity is granted no purpose will be served inasmuch as the assessee cannot argue the case against facts borne out by records and against admission.

The assessee''s counsel contended that the assessee maintained books of account and Tribunal went wrong in reversing the order of the CIT (A) to grant depreciation based on accounts. However, on going through the Tribunal''s order, we find that the Tribunal has taken into account the admission by the assessee himself that he has not maintained books of account for the lorry and taxi business, and he himself was returning net income on an estimation basis but, thereafter claimed as a deduction from such net income. We have already noted that net income was estimated and returned by the assessee. Depreciation u/s 32(1) of the Income Tax Act has to be granted in the computation of income from business. This necessarily involves maintenance of proper books of account and depreciation has to be necessarily granted on the gross income computed based on books of account. The assessee cannot make estimation of net income and then claim depreciation therefrom. We therefore feel that the assessee did not choose to maintain books of account probably because the same may not entitle him for the relief claimed, that is loss computed in lorry and taxi business. When the assessee himself has no case that he has maintained books of account and has claimed depreciation only from net income estimated by him, we do not know on what basis, the CIT (A) directed the Officer to grant depreciation based on accounts which was admittedly non-existent. Therefore, we find the Tribunal rightly reversed the order of the CIT (A), and confirmed the order of the Officer in disallowing depreciation. Moreover we find the total income from two lorries estimated by the Officer for the whole year is only Rs. 17,625 and from taxi business Rs. 2,500. The assessee cannot have any serious grievance against such low income deter Tnined by the Officer and the determination of loss is only to off-set the share of income from firms and to avoid payment of income tax. Since we find that the issue is decided on pure findings of fact recorded by the Tribunal, which is admitted by the assessee, we do not find any question of law arising from the order of the Tribunal.

We therefore, dismiss the appeal.