Commissioner of Income Tax vs Nandlal Parshuram

M. Ramakrishna, C.J.—The following question of law has been referred to us u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act), by the Income Tax Appellate Tribunal, Gauhati Bench, Guwahati :

"Whether, the Tribunal did not err on the facts as well as in law in holding that the tractors are not road transport vehicles and also in allowing investment allowance on the tractors ?"

The matter arises in this way :

Nandalal Parshuram Bishmile Chabua is owning a tractor, which was being used for transporting tea in the tea garden or tea plantation. The owner of the tractor claimed investment allowance in respect of the tractor for the assessment year 1984-85 u/s 32A of the Act. The assessing authority held that tractors are road transport vehicles and accordingly negatived the claim of investment allowance on tractors. On appeal, the Commissioner of Income Tax (Appeals) upheld the order of the assessing authority. Aggrieved by this order, the assessee took up the matter to the Appellate Tribunal. The Appellate Tribunal, however, referring to the facts and circumstances of the case, no doubt, recorded a finding in paragraph 2 of the judgment as follows :

"As such, it could not be said, that those items should be considered as road transport vehicles. One can even argue that a road inside a factory is a plant by itself as the road itself is required for plantation purposes only. We are of the opinion that the assessee is entitled to the investment allowance provided other conditions are fulfilled."

Since the Tribunal has taken a contrary view than the view taken by the assessing authority, this matter has been referred to us.

We have heard learned counsel for the applicant. Nobody appears for the assessee.

With a view to understand the correct view of facts arising out of the question referred to us, let us now see Section 2(44) of the Motor Vehicles Act, 1988 (hereinafter referred to as the Act, 1988), wherein the word "tractor" has been defined, meaning thereby, "a motor vehicle which is not itself constructed to carry any load (other than equipment used for the purpose of propulsion); but excludes a road-roller;". Therefore, regard being had to the definition clause defining what a "tractor" is in the aforesaid section, it is made clear that since the tractor is not constructed to carry any load (other than equipment used for the purpose of propulsion). Section 2(47) of the Act of 1988, defines what a "transport vehicle" is, meaning thereby, "a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle".

After having seen the definitions of both "tractor" and "transport vehicle", let us now refer to the provision of Section 32A of the Act, which deals with "investment allowance", with which question we are now concerned. It reads :

"32A. Investment allowance.--(1) In respect of a ship or an aircraft or machinery or plant specified in Sub-section (2), which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty-five per cent, of the actual cost of the ship, aircraft, machinery or plant to the assessee."

The proviso to, this sub-section lays down that :

"no deduction shall be allowed under this section in respect of--. . .

(b) any office appliances or road transport vehicles ; . . ." (emphasis'' supplied)

In the light of the foregoing, the legislation makes it abundantly clear that a "road transport vehicle" coming within the purview of Clause (b) of the proviso to Sub-section (1) of Section 32A of the Act, will not be admissible for seeking investment allowance. As we have already pointed out, since the definition of "tractor" u/s 2(44) of the Act of 1988, extracted above, defining it to be "a motor vehicle which is not itself constructed to carry any load (other than equipment used for the purpose of propulsion); but excludes a road-roller;", applying this definition clause for the "tractor" and referring to the definition clause of "transport vehicle" u/s 2(47) of the Act of 1988, extracted above, neither it can be said to be a public service vehicle, a goods carriage, an educational institution bus, nor a private service vehicle. Therefore, a tractor does not come within the definition of "transport vehicle" u/s 2(47) of the Act of 1988. In other words, a tractor, though said to be a motor vehicle, which is not itself constructed to carry any load (other than equipment used for the purpose of propulsion), would not come within the clause "road transport vehicles". In that view of the matter, the view taken by the assessing authority holding that the tractor is a road transport vehicle is erroneous. Again, the Appellate Tribunal, referring to the view taken by the assessing authority, came to a different conclusion that in respect of a motor vehicle which is being used inside the factory or plant and required for the purposes of plantation work only, the assessee was entitled to claim investment allowance, provided other conditions are fulfilled. Thus, the view taken by the Appellate Tribunal must be held to be correct.

Accordingly, we answer the question in the negative and in favour of the assessee.