1. The assessee is in appeal against the order of the Commissioner, Jullundur, for assessment year 1978-79. The only issue raised in this appeal is regarding a claim for depreciation in respect of a new bus No. PUX 905. According to the assessee, he had put this bus on road and made some income which he showed in the return for the year in issue.
The ITO disbelieved the assessee's claim and he declined to entertain a claim in respect of the depreciation. According to the ITO, the bus was purchased on 28-4-1977, for a consideration of Rs. 1,03,038.37. The chassis was fabricated in the following month when a bill dated 20-6-1977 was handed to assessee by Sutlej Coach Builders for Rs. 34,000. This vehicle was registered only on 14-7-1977 after the accounting year in issue had ended on 30-6-1977. According to the ITO, no road tax for this vehicle had been paid during the year in issue in respect of which assessee is claiming depreciation. According to the ITO, assessee could ply the bus on the road only after its registration had been effected on 14-7-1977. He could not put the bus on road before 14-7-1977, i.e., registration or before 14-11-1977, that is having paid the road tax. Only when these had been done he could ply the bus. The ITO, therefore, held that before the registration was effected he could not have run the vehicle on road. Therefore, he was not entitled to claim depreciation. There was another reason also which led him to reach this finding for which he rejected the claim of depreciation made by the assessee. It was that in absence of any registration of the vehicle he could not be considered the owner of the vehicle in the eye of law and, therefore, was not entitled to claim any depreciation under Section 32 of the Income-tax Act, 1961 ('the Act') which permits only an owner to claim depreciation. The finding of the ITO was upheld by the Commissioner and he also agreed that the assessee was not entitled to claim depreciation on this vehicle during this period. Another plea of the assessee that he had shown the income derived from plying this bus which had been arrived at by taking into account not only the receipts, but also the expenses. Having assessed income from this he submitted that it was not open to the revenue authorities to turn down his claim for depreciation. Even this plea was turned down by the lower authorities on the ground that no doubt there was some income shown in the account but it was from the vehicle No. PUS and not from the vehicle No. PUX 905.
2. The assessee is, therefore, in appeal before us and contends that the lower authorities have not properly appreciated the facts of the case. The assessee was the full and the legal owner of the vehicle No.PUX 905 even before the vehicle was registered. He had made the payment and the vehicle was in his possession. Registration was a requirement to put the vehicle on the road according to law. It did not indicate his ownership or title. Registration permitted him to use the road after paying the road tax but it did not go to supplement his title or ownership which already was fully vested in him by reason of having made the payment over the engine and the expenditure incurred over the fabrication of the chassis on it. As far as the assessment of income of the vehicle is concerned, the lower authorities have not properly applied their mind. In fact, the account of bus No. PUS was the account of the new bus No. PUX 905. Both the authorities wanted evidence to show that the vehicle No. PUS was the vehicle No. PUX 905. The assessee had pointed out before the lower authorities that he was not possessing any vehicle which was described as PUS. It was the same vehicle which was later allotted the number PUX 905. It appears that there was an error in accounts. While the consideration paid for the vehicle No. PUX 905 is accounted for in the accounts, there is no mention of any consideration paid for vehicle No. PUS. Neither there was any consideration paid to acquire any other vehicle with the vehicle No.PUS nor was any hire charges paid to acquire the latter. The same may be repeated about the disposal of such a vehicle. Since such a vehicle, which was different from the new bus which was given the number of PUX 905, was not acquired either by purchase or by hire, there was no disposal of such an imaginary vehicle neither during the accounting year in issue, nor after its expiry. Therefore, it was not proper on the part of the lower authorities to make too much of the difference between the bus No. PUX 905 and No. PUS and claim that while the receipts of any expenses incurred on the vehicle No. PUS were real and were to be assessed, the new bus No. PUX 905 was not plied during the year. It was further submitted that no transporter who takes a bus after investing the huge amount raised on borrowing could afford to keep that bus idle and not utilize it lawfully or unlawfully for making some income which may be paid towards the heavy instalment due for payment on borrowing. Therefore, the lower authorities acted in error and denied him the rightful claim of depreciation to which he is entitled. The departmental representative supported the findings of lower authorities.
3. Having heard the respective submissions, it is not possible for us to agree with the findings of the lower authorities in this matter. We must record that in reaching a finding to decline the claim of the assessee for depreciation on the new vehicle, they have made too much of the difference between the letters PUS and PUX. Accounts are not written by scholars and pundits, but by ordinary people who do not differentiate too much between the phonetics of two consonants 'S' or 'X'. If it is the case of the ITO that there was a different vehicle No. PUS different from the new bus No. PUX 905 he has not brought any shred of evidence to show the existence of such a bus either in the hand of the assessee or in the hand of any other person. Accounts of the assessee do not show that any consideration was paid to acquire such a vehicle either by way of price or by hiring charges. Even if the revenue had succeeded in showing that there was no bus which bore the number of PUS and its owner was such a person, something could be said for the case of the revenue, but even the existence of such a vehicle which bore the number of PUS having been denied by the assessee apart from the new bus has not been established in any way. We, therefore, are not prepared to subscribs to the view of the revenue that assessee had plied bus No. PUS which was different from the bus No. PUX 905. We further notice that assessee had been assessed at a net loss of Rs. 41,661 even when his claim for depreciation had been accepted in this year. The assessee will no doubt on the finding of the revenue get his full claim of depreciation in the following year, which will not prejudice his claim for carry forward of loss or depreciation in any way. Therefore, considering this aspect of the matter also, we find no support for the claim of the revenue that the assessee is making a claim to which he was not entitled in fact or in law. As for the plea that the assessee was not entitled to be considered the owner in absence of registration, we do not consider this a proper plea to deny the assessee the benefit of depreciation. If income derived from the plying of this bus had been subjected to the assessment, which has been arrived at only after considering the receipts and the expenses, we find no justification for denying him the claim of depreciation on the plea that he was not the registered owner. In effect, we reverse the finding of the lower authorities and hold that the assessee was entitled to claim depreciation on the bus.