JUDGMENT B.P. Jeevan Reddy, C.J.
1. At the instance of the Revenue, the Income-tax Appellate Tribunal has stated the following four questions under Section 256(1) of the Income-tax Act, 1961 :
"1. Whether the Tribunal was legally justified and had jurisdiction to hold, in the absence of any such plea before the Appellate Assistant Commissioner or even in the grounds of appeal before the Tribunal, that the jeeps constituted the capital asset of the assessee subject to depreciation ?
2. Whether, on the facts and in the circumstances of the case, the jeeps hired to the Congress party could be said to constitute the capital asset of the assessee subject to depreciation ?
3. Whether, on the facts and in the circumstances of the case, the assesses was entitled to deduction of expenses claimed in connection with the hiring of the jeeps ?
4. Whether, on the facts and in the circumstances of the case, the loss of Rs. 9,425, was allowable by way of balancing charge in respect of the assessment year 1968-69 ?"
The Revenue had asked two more questions to be referred, which was declined. They read :
"1. Whether there is material on record justifying the Tribunal's decision that hiring of the jeeps to the Congress party was a normal business activity of the assessee ?
2. Whether the hiring of the jeeps to the Congress party was intra vires the company ?"
The assessee is a private limited company. The assessment years concerned herein are 1967-68 and 1968-69, the previous years' being financial years 1966-67 and 1967-68, respectively. During the assessment proceedings for the assessment year 1967-68, the Income-tax Officer found that the assessee has shown a loss of Rs. 61,208 on account of sale and purchase of 18 jeeps. The assessee's case was that it had purchased these jeeps for letting them on hire and had collected, a sum of Rs. 15,380 by way of hire charges. The Income-tax Officer was, however, of the opinion that the jeeps were indeed purchased on a special order of hire placed by the City Congress Committee for use in election of the party candidate, which fact was proved by the material placed before him. The jeeps were let out to the Congress party for election purposes, whereafter they were returned to the assessee and sold. The Income-tax Officer found that the hiring of vehicles was not the usual business of the assessee and that the transaction was, in truth and in effect, an indirect contribution to a political party. He refused to allow the said loss as a business loss. On appeal, the Income-tax Officer's order was substantially confirmed by the Appellate Assistant Commissioner. On further appeal, the Tribunal opined that the hiring of jeeps was a normal business activity of the assessee, but that the said amount cannot be treated as a business loss. The operative portion of the order clearly says that this amount was disallowed ; see para 14. Be that as it may, we are not concerned with the said aspect as it is not referred to us.
2. For the assessment year 1968-69, a loss of Rs. 9,425 was claimed by the assessee on identical grounds. This was disallowed by the Income-tax Officer, but allowed by the Tribunal, though for the preceding year, an identical claim was disallowed. On a reading of the Tribunal's order, we are left with a very unsatisfactory feeling. The finding that the hiring of jeeps was a normal business activity of the assessee is very unsatisfactory and based upon a totally unrealistic approach. Unfortunately, however, the question of law, which the Revenue had asked to be stated with respect to the said finding, has not been referred by the Tribunal and its order has thus become final. Even in other respects, we find the order of the Tribunal quite unsatisfactory and inconsistent at several places. Loss on sale of jeeps was disallowed for one year but allowed for the next year. Witness the following statement in the order :
"14. The question that, however, arises for consideration is as to whether the loss claimed by the assessee was a business loss allowable in this year ? As had been noted above, the assessee utilised these jeeps for business purposes and treated the same as its stock-in-trade. In other words, these jeeps constituted the capital asset of the assessee and it can get depreciation on the same for this year."
Again witness the following statement:
"We, therefore, hold that the assessee's claim for deduction of expenses claimed at Rs. 3,828 is allowable while the claim of loss of Rs. 61,208 is not allowable. The assessee would be entitled to get depreciation on these jeeps as per the rules."
Be that as it may, we shall now proceed to deal with and answer the questions of law referred. The first question is whether, in the absence of any plea, the Tribunal was justified in treating the jeeps as the capital asset of the assessee subject to depreciation. Since the finding that the hiring of the jeeps was a normal business activity of the assessee has become final, it can be said that the jeeps constituted the capital asset of the assessee. Though the assessee did claim that the jeeps constituted its stock-in-trade, yet, having regard to the aforesaid finding, it would be more consistent to hold that the jeeps constituted the capital asset of the company. If so, the assessee is entitled to depreciation on the said jeeps. It is a well-settled proposition that where an assessee claims a particular benefit under a particular provision, the benefit cannot be defined to him merely because that particular provision is not relevant, if it is found that he is entitled to the said benefit under a different provision. In the instant case, the assessee had claimed depreciation, no doubt, claiming that the jeeps' constituted its stock-in-trade, but, as, mentioned hereinbefore, it would be consistent to hold that the jeeps constituted a capital asset of the assessee. While we are not satisfied with the approach of the Tribunal, we uphold the said finding in the interest of consistency. Accordingly, question No. 1 is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
3. In the light of our answer to question No. 1, question No. 2 must also be answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
4. Question No. 3 is also liable to be answered in favour of the assessee because once it is held that hire charges constitute income of the assessee, expenses incurred thereon have to be deducted therefrom. Accordingly, this question too is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
5. Coming to the fourth and the last question, it may be noticed that the sum of Rs. 9,425 claimed by way of loss in the assessment year 1968-89 was a capital loss. It cannot be treated as a business loss once the jeeps are treated as a capital asset. The capital loss cannot be deducted out of the revenues of the assessee. This question is, accordingly, answered in the negative, that is, in favour of the Revenue and against the assessee.
6. The reference is answered accordingly. There shall be no order as to costs.