ORDER K.G. Bansal, A.M. : 17th May, 2007 Both these appeals of Revenue involve common grounds regarding deductibility or otherwise of depreciation on foreign made cars in computing income of assessee. appeals were argued in consolidated manner b y learned counsel for assessee and learned Departmental Representative. In view thereof, we find it fit to pass common order on these appeals. For sake of ready reference, grounds taken by Revenue in appeal for asst. yr. 2001-02 are reproduced below : "(1) learned CIT(A) erred in directing AO to allow depreciation on foreign made car without appreciating fact that assessee is not in business of running car on hire for tourist, but in business of running hotel. (2) learned CIT(A) further erred in holding that depreciation has been rightly claimed on imported car without appreciating fact that taxi facilities were provided to their own hotel guests/clients and not to tourists in general. (3) learned CIT(A) also erred in directing AO to allow depreciation without appreciating fact that assessee was not running any independent business of tour and travelling." 2 . In assessment order, it is mentioned that assessee has been conducting business of running hotels in Delhi and Agra. assessee claimed depreciation of Rs. 11,44,317 on German made car, Mercedez Benz Type S-320, Sedan Long. He referred to provisions of s. 32 of Act, which permits deduction of depreciation on motor cars manufactured outside India if it is inter alia used in business of running it on hire for tourists. He was of view that assessee was engaged in business of running hotels and not running motor cars on hire for tourists. Therefore, he dismissed claim of assessee. 2.1 Before learned CIT(A), it was represented that motor cars were used for providing transport facilities to guests and clients. sum of Rs. 67,725 was charged from them in this year. Since motor cars were being used as taxis, assessee was entitled to deduction of depreciation. learned CIT(A) accepted this view and allowed depreciation. 3. Before us, learned Departmental Representative referred to cl. (a) of proviso to s. 32(1), which reads as under : "Provided that no deduction shall be allowed under this clause in respect of (a) any motor car manufactured outside India, where such motor car is acquired by assessee after 28th Feb., 1975 but before 1st April, 2001, unless it is used (i) in business of running it on hire for tourists, or (ii) outside India in his business or profession in another country." It was pointed out that learned CIT(A) has not given any finding on issue whether motor cars were used in business of running them on hire for tourists. 3.1 Further, he referred to incomes earned in various years by assessee by way of rentals from using motor cars in its hotel business which, according to him, were too low, thereby leading to impression that they were primarily used for personal purpose and not run for hire. details of rental income are furnished below : Income Depreciation Sl. Assessment from car claimed & allowed No. year hiring (Rs.) (Rs.) @ 1. 1995-96 47,450 13,72,858 40% 2. 1996-97 48,530 8,23,715 3. 1997-98 60,163 4,94,229 4. 1998-99 22,908 2,96,537 5. 1999-2000 49,250 1,77,922 6. 2000-01 37,000 1,06,753 @ 7. 2001-02 67,215 11,44,317 20% @ 8. 2002-03 29,280 8,85,454 20% @ 9. 2003-04 273 7,31,733 20% 4. As against aforesaid, learned counsel for assessee pointed out that in previous year relevant to asst. yr. 2001-02, assessee imported one more car on basis of import licence dt. 25th April, 2000, granted by Foreign Trade Office. justification for import was that old Honda and Mercedez Benz motor cars, used for foreign tourists, required replacement. It was certified by assessee that imported motor car will be exclusively used for foreign tourists. For these purposes, he referred to pp. 9, 13 and 18 of paper book. 4.1 He relied on Board Circular No. 609, dt. 29th July, 1991 [(1992) 96 CTR (St) 233], which inter alia provided that depreciation may be allowed where transportation services are provided as part of package tour for tourists. It was also his case that receipts were low as on booking of suits, free transport was provided to tourists. This circular applies in case of tour operators and travel agents. Paras 2.1 and 2.2 of circular are reproduced below : "2.1 intention behind this provision is to discourage use of foreign cars for purposes of business or profession. However, in order to promote tourism industry, exception has been made in case of foreign motor cars used in business of running them on hire for tourists, on which full depreciation is allowable. 2.2 Where tour operators or travel agents use certain foreign motor cars, owned by them, for providing transportation services to tourists, depreciation should be allowed on these cars. position will not change even where such transportation services are provided as part of package tour for tourists, which may include number of other services like boarding and lodging, service of guides etc. tourist, who opts for package tour, agrees to pay for number of services including use of car provided to him by tour operator or travel agent. Thus, it can be said that car has been taken by him on hire from such tour operator or travel agent. Therefore, depreciation on foreign motor cars, owned by him and used for providing transportation services to tourists, whether in package tour or otherwise, should be allowed." 4.2 Further, he relied on decision of Hon ble Kerala High Court in case of CIT vs. Dr. K.R. Jayachandran (1995) 124 CTR (Ker) 11 : (1995) 212 ITR 637 (Ker). Tribunal had given finding that plying of ambulance van on hire itself constituted business of assessee though it may be incidental to running of hospital. In view thereof, it was held that assessee was entitled to deduction of depreciation at higher rate of 40 per cent. He also relied on decision of Hon ble Rajasthan High Court in case of CIT vs. Lake Palace Hotels & Motels (P) Ltd. (2006) 206 CTR (Raj) 620 : (2006) 286 ITR 589 (Raj). Hon ble Court pointed out that question whether motor car has been used in business of plying on hire is question of fact. There was no bar on assessee to combine number of businesses. condition precedent to grant of depreciation is that motor car was used for plying on hire for tourists. Board circular clarifies that when it is used by travel agent etc. in package tour, aforesaid condition is satisfied. There was no reason to deny benefit to hotelier when motor car is used to transport tourists for separate and independent charges. Tribunal had given finding that this was independent business as motor car was provided on demand for hire charges. Thus, it was held that depreciation was deductible. 5 . We have considered facts of case and rival submissions. facts advanced by learned counsel are that for asst. yr. 2001-02, motor cars were used for pick up and drop service of tourist where suite was booked and also provided on hire when demanded, for which hire charges of Rs. 67,215 were received on plying two motor cars. It was fairly conceded that no hire charge was received (the table shows receipt of Rs. 273) from plying two motor cars in asst. yr. 2003-04 as they were used only for pick up and drop service of tourists, as hotel business was very slack. As against this, case of learned Departmental Representative was that hire charges were too low to lead to inference that assessee plied two motor cars on hire. assessee was carrying on business of running hotels and there was no business of plying of motor cars on hire. On considering facts of case, we find that hire charges in one year were nominal at Rs. 67,215 and they were nil in other year. There is no evidence on record to show that in package for hiring hotel suite or room hire charges for motor cars were separately charged and shown. In fact, case of assessee is otherwise, namely, that pick up and drop service was part of package for hire of suite in asst. yr. 2001-02 and in all cases in asst. yr. 2003-04. These facts do not establish that assessee was carrying on any independent and separate business of running motor cars on hire. Thus, facts of cases of Lake Palace Hotels & Motels (P) Ltd. (supra) and Dr. K.R. Jayachandran (supra) are distinguishable. only thing that can be said is that motor cars were primarily used in hotel business in one year and wholly so used in second year. assessee is not carrying on business of tour operator or travel agent and, thus, Board circular is not applicable. question still remains whether aforesaid beneficial circular can be extended to hotel business also. Hon ble Rajasthan High Court pointed out that there was no reason to deny depreciation in case of hotel offering package of boarding and lodging and providing transport on separate and independent charges. In this case separate and independent charges are not there as motor cars have been primarily or wholly used for providing pick up and drop services . In such situation, nominal receipts in one year can only be attributed to business of hotel. Thus, extending scope of beneficial circular, applicable to tour operators and travel agents, to hotel business, where there are no or nominal hire charges, will amount to usurping powers of Board, granted to it under s. 119 of Act. Tribunal has to decide controversy on merits, of course, by taking Board circular, as it exists into account. If we do that, it is found that motor cars were used in business of hotel and not in business of running them on hire for tourists, Therefore, we are of view that learned CIT(A) erred in allowing deduction of depreciation to assessee. 6. In result, both appeals of Revenue are allowed. K.C. Singhal, J.M. : 9th July, 2007 7 . After going through order proposed by my learned Brother and having discussed matter, I have not been able to persuade myself to agree with conclusion arrived at by him. Therefore, separate order is being passed by me. 8. question for consideration of Bench is whether assessee is entitled to depreciation on car imported by assessee under first proviso to s. 32(1) of IT Act, 1961 ( Act ) which provides that no deduction by way of depreciation shall be allowed in respect of any motor car manufactured outside India which has been acquired after 28th day of Feb., 1975, unless it is used : (i) in business of running it on hire for tourists; or (ii) outside India in his business or profession in another country. 9 . To appreciate controversy, it would be appropriate to refer to relevant facts. assessee has been in business as hotelier since long. assessee imported one Mercedes Benz S-320 car from Germany during asst. yr. 2001-02 and used same in its business. It claimed depreciation @ 40 per cent on such car in years under consideration. claim was disallowed by AO on grounds that (i) car is foreign made car; and (ii) assessee is not in business of running car on hire for tourists. provision of first proviso to s. 32(1) of Act was invoked in disallowing claim of assessee. On appeal, CIT(A) considering facts that (i) assessee is running four-star hotel at Delhi and Agra, (ii) car was imported for purpose of providing transport facilities to guests and clients, and (iii) assessee charged guests for providing such facilities held that car was being used as taxi for purpose of giving taxi facilities to hotel guests. Hence, assessee was entitled to depreciation under s. 32(1) proviso. Aggrieved by same, Revenue has preferred these appeals before Tribunal. 10. arguments of both parties have already been set out in proposed order and, therefore, need not be repeated. 11. Let me first discuss legal position. There is no dispute that in order to claim depreciation on foreign made car, assessee must be engaged in business of running car on hire for tourists. So, where assessee is exclusively carrying on such business, depreciation on foreign made car has to be allowed. However, question arises whether depreciation can be allowed where such business is incidental to other business. For example, main business of assessee may be as tour operator, travel agent or hotel but transportation of tourists may be incidental to such business. Board, vide Circular No. 609, dt. 29th July, 1991 has clarified, vide para 2.2 (also extracted in para 4.1 of proposed order), that depreciation would be allowed in case of tour operators or travel agents who use such cars for providing transportation services to tourists. It has been further clarified that legal position would not change if transportation services are provided as part of package tour for tourists since tourist who opts for package tour agrees to pay for number of services including use of car. Thus it can be seen that car has been taken on hire from such tour operator. In view of such Board circular, it has to be held that depreciation would be allowed even where hiring of car is incidental to main business carried on by assessee. 1 2 . view expressed in preceding para is also fortified by judgment of Hon ble Rajasthan High Court in case of Lake Palace Hotels & Motels (P) Ltd. (supra). In that case, assessee was engaged in business as hotelier. It used foreign made cars also for transportation of tourists and, therefore, claimed depreciation on such cars. claim was disallowed on ground that assessee was not engaged in business of running cars on hire but it was only activity incidental to hotel activity. Tribunal allowed claim after reaching finding that assessee was running them on hire. In coming to this conclusion, Tribunal took into consideration fact that cars were imported by assessee with prior approval of Reserve Bank of India (RBI) under taxi quota with condition that such cars would be used for running on hire as well as Board Circular dt. 29th July, 1991 (already referred in preceding para). Tribunal also held that merely because business of hiring was at restricted scale would not take out case of assessee from purview of provisions of s. 32(1) proviso. 13. On reference under s. 256 of Act, Court posed question as "whether assessee was using cars owned by him in business of running them on hire" ? Hon ble Court opined at pp. 593-594 of Report : ".... It is not prohibited by law that person cannot run and combine number of businesses simultaneously. It is also common feature that where certain business activities are incidental and supplementary to each other and it is sound to carry on such business also for increasing their profitability, person can combine such business activities simultaneously notwithstanding that some of such business may only be running primarily with intention to increase overall profit or reaching profit in such business activities instead of passing on to others, who may carry on such business independently. Therefore, for present purposes, guideline of dominant business and incidental business of assessee is not relevant. What is relevant is conditions required for claiming benefit of deduction on account of depreciation on cars manufactured outside India, i.e., imported cars, by assessee are fulfilled, or conditions for claiming additional depreciation as business assets are fulfilled. condition is only one that such car must be used in business of running it on hire for tourists or for business of running taxies. hotel business is major instrument of carrying on business of tourism in India and package of facility which it provides to recipients are activities towards tourism. aforesaid circular had stated in no uncertain terms that where transporter or travel agent renders such services by way of package and which package includes transport, boarding and lodging, it fulfils conditions of proviso to sub-cl. (1)(b) of s. 32 of IT Act, 1961. If total package of boarding or lodging and transportation by one person can result in bifurcation of service by providing for transport on hire to its customers to hold it as vehicle used for carrying on business of running it on hire, there is no reason to deny same interpretation and result in case of hotel having package of boarding and lodging and providing transport service as separate and independent condition as part of package to be offered which includes boarding, lodging and fare for hiring cars on separate and independent charges when such demand is made. It is not essential for them to have transport as part of one consideration, whether used or not. Obviously, charging hire is result of independent contract." Applying aforesaid legal position, Hon ble Court upheld order of Tribunal by observing as under : "In that view of matter, firstly we are of opinion that Circular dt. 29th July, 1991, fully supports view which Tribunal has taken. Apart from that Tribunal has also referred to fact that assessee is charging hire for providing vehicle to its customers as independent business, which is corroborated by fact that vehicles were imported by assessee with approval of RBI under taxi quota only, giving out clear intention that it is running them on hire. assessee has also referred to fact and which is not denied that respondent assessee is charging hire charges from customers to use vehicles for transportation, primarily which is being used for hotel and for reaching airport on checking out for leaving place. statutory provision nowhere puts restriction that if business is running on restricted scale, benefit could not be available. Therefore, it cannot be said that there was no evidence on basis of which Tribunal could reach its conclusion that assessee has acquired vehicles in question for running taxi on hire and that assessee has used vehicle in question for running them on hire for tourists." 14. Similar view has been taken by Hon ble Kerala High Court in case of Dr. Jayachandran (supra). In that case, assessee was running hospital and used his ambulance for carrying his patients against charges. assessee claimed depreciation @ 40 per cent. However, higher rate of depreciation was disallowed by CIT under s. 263 of Act on ground that assessee was not engaged in business of hiring. On appeal, Tribunal set aside order of CIT by holding that assessee was running ambulance on hire and consequently, AO justified in allowing higher rate of depreciation. High Court rejected Revenue s application under s. 256(2) by observing that plying of ambulance on hire itself constitutes business of assessee though it may be incidental to running of hospital. It was also held that one business can be advantageously combined with another business. 15. In view of above discussion it is held that if foreign made car is used by assessee either exclusively in business of running on hire or in business of running on hire being incidental to main business such as tour operator, travel agent or hotelier. 16. In present case, assessee had been using foreign made cars in earlier years and claim of depreciation had been allowed by tax authority as is apparent from order of AO under s. 143(3) for asst. yr. 1995-96 read with statement of accounts filed by assessee in paper book at pp. 3 to 8. In earlier years, assessee had imported Honda car on 15th Feb., 1988, Mercedes car on 30th March, 1989 and another Mercedes car on 31st May, 1994, which were being used for transporting foreign tourists as is apparent from application dt. 25th Feb., 2000 made to Government of India, Department of Tourism, for permission to import another Mercedes car as earlier cars had become old and need replacement (pp. 18-19 of paper book). perusal of application also shows that car was required to be used exclusively by foreign tourists. Same justification was given by assessee in application made to RBI dt. 9th Feb., 2000, copy of which is placed at pp. 12-17 of paper book. copy of import licence appearing at p. 9 of paper book shows that licence was granted subject to condition that car would be used for hotel business and would not be sold or disposed of otherwise. endorsement on licence shows that car was imported in India on 29th Aug., 2000. These evidences clearly show that assessee had imported car in asst. yr. 2001-02 for exclusive use of tourists. only question is whether such car was used for transporting tourist on hire. case of assessee has been that due to drop in business, no separate charge was made from tourists but offered car for use by tourists from and to airport as part of package. Board has already clarified that claim of assessee cannot be rejected merely on ground that car is used as part of package. There is no evidence that car was used for some other purposes. When car was imported on conditions that it would be used only for purpose of transporting tourists, it can well be presumed that car was used for such purpose. If such car was used as part of package then naturally no separate charge would appear in books of account. But it does not mean that car was not used for carrying foreign tourists. Accordingly, it is held that car was used in business of running same on hire and consequently, assessee is entitled to depreciation. order of CIT(A) is, therefore, upheld. 17. In result, appeals of Revenue stand dismissed. REFERENCE UNDER S. 255(4) OF IT ACT, 1961 11th July, 2007 Since there is difference of opinion between Members constituting Bench on certain point, we request Hon ble President, Tribunal, to kindly refer following question for opinion of Third Member : "Whether on facts and circumstances of case and in law, assessee i s entitled to claim depreciation in respect of foreign made car under s. 32(1) proviso of IT Act, 1961 ?" Vimal Gandhi, President (As Third 24th March, Member) : 2008 On account of difference between learned AM and learned JM of Tribunal, C Bench, New Delhi, following question has been referred to me for consideration under s. 255(4) of IT Act : "Whether on facts and circumstances of case and in law, assessee i s entitled to claim depreciation in respect of foreign made car under s. 32(1) proviso of IT Act, 1961 ?" 2. facts of case briefly stated are that assessee, Hotel Marina, Connaught Place, New Delhi, submitted its return declaring loss of Rs. 89,50,417, In P&L a/c, assessee had claimed depreciation on imported car which was disallowed with following observations : "The assessee is not in business of running cars on hire for tourists. As this car is manufactured outside India, in view of clear provision of s. 32 of IT Act, 1961, depreciation claimed on this Mercedes car is not allowable. Act, 1961, depreciation claimed on this Mercedes car is not allowable. Therefore, depreciation of Rs. 11,44,317 claimed on imported car is disallowed and added back to income of assessee." 3 . assessee impugned above disallowance in appeal before CIT(A) and contended that Mercedes Benz car, on which depreciation was not allowed, was imported by assessee for use in business of running car on hire for tourists. hotel business was carried from Delhi. It started at Agra also in assessment year under consideration. It was submitted that imported car was purchased for purpose of providing transport facilities to its guests/clients for which separate account was maintained from year to year. assessee drew attention to receipts shown in past from car hire. Accordingly, depreciation on imported car was claimed in appeal. learned CIT(A) allowed claim of assessee with following observations : "4. Looking to facts of case that appellant is running four star hotels in Delhi and Agra and they had imported Mercedes Benz car for purpose of providing transport facilities to guests and clients. It is also stated that they charged their guests for providing these facilities and they have shown sum of Rs. 67,725 as income from running of car. Since car has been used for purpose of taxi for hotel guests, it comes within proviso of s. 32 and depreciation is allowable on it. This fact is correct as car is used as taxi for purpose of giving taxi facilities to hotel guests and hotel being part of hospitality industry where all types of tourists and travel services have been provided to guests. Depreciation has been rightly claimed on imported car by appellant as they are running it for taxi business purpose for which they are showing business income. This point is decided in favour of appellant. AO is directed to allow depreciation." 4 . Revenue being aggrieved carried matter in appeal before Tribunal. After hearing both parties, learned Members of Tribunal could not reach consensus. According to learned AM, assessee has not been able to prove that it was carrying on business of hire of motor cars. Therefore, in light of provisions of s. 32(1), assessee was not entitled to depreciation on car manufactured outside India. learned AM took into account detail of income from car hiring shown and depreciation claimed and allowed in different years from asst. yr. 1995-96 to asst. yr. 2003-04. He was of view that assessee had shown nominal or nil receipt as hire charges in year under consideration which clearly showed that assessee was not carrying business of plying of motor cars on hire. cars were mainly used for pick up and drop service of tourists. AM further held that decision of Hon ble Rajasthan High Court in case of CIT vs. Lake Palace Hotels & Motels (P) Ltd. (2006) 206 CTR (Raj) 620 : (2006) 286 ITR 589 (Raj) and circular of Board No. 609 dt. 29th July, 1991 did not advance case of assessee. Accordingly, in order, learned AM proposed that appeal of Revenue be accepted and order of AO be restored. 5 . learned JM did not agree with above proposed order of learned AM. He noted requirement of first proviso to s. 32(1) of IT Act and also facts found by learned CIT(A) in impugned order. Learned JM first discussed legal position in light of Circular No. 609 dt. dt. 29th July, 1991 [(1992) 96 CTR (St) 233] and decision of Hon ble Rajasthan High Court in case of CIT vs. Lake Palace Hotels & Motels Ltd. (supra). On basis of circular referred to above, he concluded that depreciation on importing cars would be permissible if cars are used for providing transportation services to tourists. This legal position would not change if transportation services are provided as part of package tour for tourists since tourist who opts for package tour agrees to pay for number of services including use of car. This, according to learned JM, is clarified in circular of CBDT. 6. Learned JM also discussed judgment in case of Lake Palace Hotels & Motels (P) Ltd. (supra). He noted facts of that case where assessee was engaged in business as hotelier. It used foreign made car for transportation of tourists and claimed depreciation on such cars. Tribunal had found that car was imported by assessee with prior approval of RBI and under taxi quota for running on hire. It was held by Tribunal in that case that merely because business of hiring was at restricted scale could not deprive assessee of claim for depreciation under proviso to s. 32(1). On further reference to Hon ble High Court, legal position was explained as under : ".......It is not prohibited by law that person cannot run and combine number of businesses simultaneously. It is also common feature that where certain business activities are incidental and supplementary to each other and it is sound to carry on such business also for increasing their profitability, person can combine such business activities simultaneously notwithstanding that some of such business may only be running primarily with intention to increase overall profit or reaching profit in such business activities instead of passing on to others, who may carry on such business independently. Therefore, for present purposes, guideline of dominant business and incidental business of assessee is not relevant. What is relevant is conditions required for claiming benefit of deduction on account of depreciation on cars manufactured outside India, i.e., imported cars, by assessee are fulfilled, or conditions for claiming additional depreciation as business assets are fulfilled. condition is only one that such car must be used in business of running it on hire for tourists or for business of running taxies. hotel business is major instrument of carrying on business of tourism in India and package of facility which it provides to recipients is activity towards tourism. aforesaid circular had stated in no uncertain terms that where transporter or travel agent renders such services by way of package and which package includes transport, boarding and lodging, it fulfils conditions of proviso to sub-cl. (1)(b) of s. 32 of IT Act, 1961. If total package of boarding or lodging and transportation by one person can result in bifurcation of service by providing for transport on hire to its customers to hold it as vehicle used for carrying on business of running it on hire, there is no reason to deny same interpretation and result in case of hotel having package of boarding and lodging and providing transport service as separate and independent condition as part of package to be offered which includes boarding, lodging and fare for hiring cars on separate and independent charges when such demand is made. It is not essential for them to have transport as part of one consideration, whether used or not. Obviously, charging hire is result of independent contract." Applying aforesaid legal position, Hon ble Court upheld order of Tribunal by observing as under : "In that view of matter, firstly we are of opinion that Circular dt. 29th July, 1991, fully supports view which Tribunal has taken. Apart from that Tribunal has also referred to fact that assessee is charging hire for providing vehicle to its customers as independent business, which is corroborated by fact that vehicles were imported by assessee with approval of RBI under taxi quota only, giving out clear intention that it is running them on hire. assessee has also referred to fact and which is not denied that respondent assessee is charging hire from customers to use vehicles for transportation, primarily which is being used for hotel and for reaching airport on checking out for leaving place. statutory provision nowhere puts restriction that if business is running on restricted scale, benefit could not be available. Therefore, it cannot be said that there was no evidence on basis of which Tribunal could reach its conclusion that assessee has acquired vehicles in question for running taxi on hire and that assessee has sued vehicle in question for running them on hire for tourists." 7. Learned JM further found that Hon ble Kerala High Court in case of CIT vs. Dr. K.R. Jayachandran (1995) 124 CTR (Ker) 11 : (1995) 212 ITR 637 (Ker) has taken similar view. Accordingly, learned JM concluded that if foreign made car is used by assessee either exclusively in business of running on hire or being incidental to main business such as tour operator, travel agent or hotelier, depreciation would be allowed. 8 . learned JM upheld order of learned CIT(A) with following observations : "16. In present case, assessee had been using foreign made cars i n earlier years and claim of depreciation had been allowed by tax authority as is apparent from order of AO under s. 143(3) for asst. yr. 1995- 96 read with statement of accounts filed by assessee in paper book at pp. 3 to 8. In earlier years, assessee had imported Honda car on 15th Feb., 1988, Mercedes car on 30th March, 1989 and another Mercedes car on 31st May, 1994, which were being used for transporting foreign tourists as is apparent from application dt. 25th Feb., 2000 made to Government of India, Department of Tourism, for permission to import another Mercedes car as earlier cars had become old and needed replacement (pp. 18-19 of paper book). T h e perusal of application also shows that car was required to be used exclusively by foreign tourists. Same justification was given by assessee in application made to RBI dt. 9th Feb., 2000, copy of which is placed at pp. 12- 17 of paper book. copy of import licence appearing at p. 9 of paper book shows that licence was granted subject to condition that car would be used for hotel business and would not be sold or disposed of otherwise. endorsement on licence shows that car was imported in India on 29th Aug., 2000. These evidences clearly show that assessee had imported car in asst. yr. 2001-02 for exclusive use of tourists. only question is whether such car was used for transporting tourist on hire. case of assessee has been that due to drop in business, no separate charge was made from tourists but offered car for use by tourists from and to airport as part of package. Board has already clarified that claim of assessee cannot be rejected merely on ground that car is used as part of package. There i s no evidence that car was used for some other purposes. When car was imported on conditions that it would be used only for purpose of transporting tourists, it can well be presumed that car was used for such purpose. If such car was used as part of package then naturally no separate charge would appear in books of account. But it does not mean that car was not used for carrying foreign tourists. Accordingly, it is held that car was used in business of running same on hire and consequently, assessee is entitled to depreciation. order of CIT(A) is, therefore, upheld." 9. On account of difference between learned Members, matter has been placed before me under s. 255(4) of IT Act. 10. I have heard both parties. Learned Departmental Representative drew my attention once again to receipts shown by assessee in different years from hiring of car which are also noted by learned AM in impugned order. He argued that from above details of receipt, it cannot be inferred that assessee had carried business of hiring of car to fall within exception provided in proviso to s. 32(1) of IT Act. Learned Departmental Representative further argued that there was no separate log book relating to movement of imported cars and no evidence to show that imported cars were separately given on hire. Cars might have been used as part of business of hotel. In that case, no depreciation was permissible. Learned Departmental Representative placed reliance on order of AM who, according to him, has rightly recorded that assessee on facts failed to prove that it carried business of running of car on hire for tourists. In light of above factual finding, assessee was not entitled to any depreciation. 11. Learned counsel for assessee Shri Marwah, on other hand, drew my attention to details of hiring charges shown from imported cars and depreciation claimed thereon for asst. yrs. 1995-96 to 2002-03. He pointed out that except for year under consideration, claim of assessee for depreciation was all along accepted. He submitted that hotel business upto asst. yr. 2001-02 was good and imported car was used to be given to guests for hiring i.e. as pick up and drop service from airport and also for sightseeing at night. For these charges, assessee maintained separate register and even in P&L a/c, these were separately shown. However, from year 2002 onwards, there was slackness in hotel business and, accordingly, imported cars were used as part of package. Various guests or tourists staying in hotel were permitted to use imported car as part of package. Charges for use of imported car were not separately made and were included in hotel bill. Shri Marwah further pointed out that cars were imported by assessee as per permission and license granted by Controller of Imports and Exports. car was permitted to be imported to India for specific purpose of use by tourists. Shri Marwah also drew my attention to copies of application and license granted by competent authorities available at pp. 9 to 19 of paper book. No dispute was raised on above facts stated by assessee. In fact, these were specifically admitted all along in past and depreciation claimed was allowed. matter, according to Shri Marwah, was also covered in favour of assessee as per Circular No. 609 dt. 29th July, 1991 of CBDT wherein para 2.2 reads as under : "Where tour operators or travel agents use certain foreign motor cars, owned by them, for providing transportation services to tourists, depreciation should be allowed on these cars. position will not change even where such transportation services are provided as part of package tour for tourists, which may include number of other services like boarding lodging, service of guides, etc. tourist, who opts for package tour, agrees to pay for number of services including use of car provided to him by tour operator or travel agent. Thus, it can be said that car has been taken by him on hire from such tour operator or travel agent. Therefore, depreciation on foreign motor cars, owned by him and used for providing transportation services to tourists, whether in package tour or otherwise, should be allowed." 12. Shri Marwah further relied on decision of Kerala High Court in case of CIT vs. Dr. K.R. Jayachandran (supra). It was case of nursing home where imported vehicle was used as incidental to nursing home business. Hiring of imported vehicle was not separate business. Even in that case, their Lordships held that assessee was entitled to depreciation. Shri Marwah also relied upon decision of Tribunal in case of Dy. CIT vs. Machino Techno Sales Ltd. (2001) 70 TTJ (Cal)(TM) 340 : (2001) 250 ITR 12 (Cal)(TM)(AT) wherein principles laid down by Kerala High Court were applied by Tribunal. Shri Marwah further argued that rule of consistency was applicable in this case. Revenue authorities were not entitled to take view different from one taken by them in past on identical facts. Shri Marwah further argued that in asst. yr. 2006-07, revenue earning from hiring of car was more than Rs. 2 lakhs on account of improvement in business. Therefore, on facts and circumstances, it cannot be said that assessee did not carry on hiring business. Shri Marwah accordingly relied upon and supported proposed order of learned JM. 1 3 . In rebuttal, learned Departmental Representative again emphasized that onus was on assessee to show that imported car was used in hiring business. assessee has shown meagre receipt of only Rs. 273 and, therefore, it cannot be said that car was used for hiring. He accordingly submitted that order of AO was right order and should be restored. 14. I have given careful thought to rival submissions of parties. AO, after reproducing provision of s. 32 of IT Act, disallowed claim of depreciation for car relying on facts that car in dispute was manufactured outside India. 15. On further appeal, learned CIT(A) allowed claim. relevant observations have already been reproduced in earlier part of order. It is not in dispute that assessee had been utilizing imported cars since year 1979 by giving it on hire to tourists residing in its hotel. Hiring charges were separately shown and assessed and claim of depreciation duly allowed to assessee. It is no doubt true that in period under consideration, hiring charges were considerably reduced. However, reduction in charges has been duly explained. It is explained that rent for hiring imported cars was not separately charged but included in hotel bill as car was offered for use as package with letting of hotel. Hire charges were part of hotel charges. This has to be done on account of reduction in tourists after 9/11. This claim of assessee has not been refuted by AO. He disallowed claim without looking to peculiar facts of case and as per observations already reproduced above. It has also not been considered by AO that foreign cars were imported under specific scheme and as per license granted by Controller of Imports and Exports under EPCG Scheme. Under scheme, imported car could be registered and used for tourist purposes only. There is no material on record to show that cars were not used for hire business as accepted in earlier years. In my considered opinion, learned JM has thoroughly considered facts and circumstances of case and background in which dispute arose. He has also correctly relied upon decisions of Rajasthan and Kerala High Courts. It has been authoritatively held that depreciation is to be allowed even if cars are used to carry incidental business. Learned Departmental Representative has not brought to my knowledge any decision taking view contrary to one canvassed by learned Representative of assessee. I am, therefore, unable to agree that assessee failed to show that it has used imported car for business of running them on hire for tourists. There is no change in facts and circumstances of case in year under consideration. reduction in hire charges was duly accepted by learned CIT(A). Revenue has not placed any material on record to show that aforesaid finding recorded by learned CIT(A) suffered from any infirmity. In light of what has been stated above and in proposed order of learned JM, I see no scope to interfere with impugned order of learned CIT(A). I agree with order proposed by learned JM and answer question accordingly. 16. matter may now be placed before regular Bench for passing order in accordance with law. *** ASSISTANT COMMISSIONER OF INCOME TAX v. MARINA HOTEL