By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi, Chartered Accountants
Section 32, Appendix I to Rule 5 and
Circular No. 652, dated 14-6-1993: An assessee is entitled for higher
depreciation on pay loaders, dozers and water tankers used by it in its
business of transportation of goods on hire.
FACTS
The assessee was engaged in the business of
transportation and had claimed higher rate of depreciation @ 30% on pay
loaders, dozers and water tankers.
During the relevant assessment year, the
main part of assessee’s transportation business was done for M/s Anand
Transport.
The Assessing Officer (AO) studied the
agreement entered by the assessee with
Anand Transport and found that assessee had to supply pay loaders for
hatch work, loading material into trucks from wharf, transporting to designated
stock yard by trucks, stacking at stock yard, loading from stock yard into
trucks, carting from stock yard to railway siding and loading of goods into
railway wagon.
According to AO, vehicles which were used in
the business of running them on hire were entitled for higher depreciation.
As per the AO, the cranes and pay loaders
were used by the assessee for his own business of transportation and there was
no hiring of vehicles. Hence AO disallowed higher rate of depreciation.
According to the CIT(A), there was an
element of ‘hiring’ in the business activities of the assessee and hence
directed the AO to allow depreciation @ 30%.
On appeal by the revenue before the
Tribunal:
HELD
There is no dispute that the assessee was
engaged in the business of transportation of coal and iron ore.
Part III(3)(ii) of Appendix I to the Income
Tax Rules allows higher rate of depreciation @ 30% to following category of
Machinery and Plant –
‘Motor buses, motor lorries and motor taxis
used in a business of running them on hire’.
By virtue of Circular No. 652, dated
14-6-1993, higher rate of depreciation @ 30% mentioned in Part III(3)(ii) of
Appendix to the Income Tax Rules would get an extended meaning than what
literally follows on their reading.
As per Circular No. 652 (supra), an
assessee shall be entitled to higher rate of depreciation @ 30% on motor
vehicles used by it in its business of transporting of goods on hire.
In our opinion, the agreement entered by the
assessee with M/s Anand Transport clearly shows that its duty was to transport
the goods provided by Anand Transport from one place to another. We cannot say
that element of ‘hiring’ was absent.
Hence, we do not find any reason to
interfere with the order of the CIT(A) and the assessee would be eligible for
higher rate of depreciation on the vehicles used by it in its business of
transportation of goods on hire.
Note – Reliance
had been placed on Bombay High Court in the case of SC Thakur & Bros.
[2010] 322 ITR 463 and JCIT vs. Avinash Transport in ITA No. 1909/Kol/2012
dated 13.8.2015
