INCOME-TAX (THIRD AMENDMENT) RULES, 2009 – AMENDMENT IN NEW APPENDIX 1

NOTIFICATION NO. 10/2009, DATED 19-1-2009

In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (Third Amendment) Rules, 2009

(2) They shall come into force on the 1st day of April, 2009.

2. In the Income-tax Rules, 1962, in the Table to New Appendix 1, in Part-A relating to TANGIBLE ASSETS, under the heading III. MACHINERY AND PLANT, in item (3), after sub-item (vi) and entries relating thereto, the following shall be inserted, namely:—

“(via) New commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession [See paragraph 6 of the Notes below this Table]  50”.

Income Tax – 50% Depreciation for New Motor Vehicles

The CBDT has amended the Table to the New Appendix-I prescribing the Rates at which depreciation is admissible. Now new commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession , will get 50% depreciation.

  • “Commercial vehicle” means
  • “heavy goods vehicle”,
  • “heavy passenger motor vehicle”,
  • “light motor vehicle”,
  • “medium goods vehicle” and
  • “medium passenger motor vehicle”

but does not include

  • “maxi-cab”,
  • “motor-cab”,
  • “tractor ” and “road-roller”.

The expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “road-roller” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).

And the Motor Vehicles Act defines these as,

  • “heavy goods vehicle” means any goods carriage the gross vehicle weight of which, or a tractor or a road – roller the unladen weight of either of which, exceeds 12,000 kilograms;
  • “heavy passenger motor vehicle” means any public service vehicle or private service vehicle or educational institution bus or omnibus the gross vehicle weight of any of which, or a motor car the unladen weight of which, exceeds 12,000 kilograms;
  • “light motor vehicle” means a transport vehicle or omnibus the gross vehicle weight of either of which or a motor car or tractor or road – roller the unladen weight of any of which, does not exceed 6,000 kilograms;
  • “medium goods vehicle” means any goods carriage other than a light motor vehicle or a heavy goods vehicle;
  • “medium passenger motor vehicle” means any public service vehicle or private service vehicle, or educational institution bus other than a motor cycle, invalid carriage, light motor vehicle or heavy passenger motor vehicle;
  • ” maxicab ” means any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward;
  • “motorcab” means any motor vehicle constructed or adapted to carry not more than six passengers excluding the driving for hire or reward;
  • “tractor” means 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;
  • And the Act does not define Road-roller.

FURTHER CLARIFICATION ON ABOVE

There has been an increase in depreciation for commercial vehicles from 40 per cent to 50 per cent. Such depreciation is available both for business and profession. Would it mean that the assessees engaged in professions such as law, medicine and audit would be eligible for 50 per cent deduction for depreciation for cars used for profession? Commercial vehicle should ordinarily mean any vehicle used for the purpose of commerce which will include profession. But “commercial vehicle” is understood in the Notes to the Depreciation Schedule as under:

“6. “Commercial vehicle” means “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle” and “medium passenger motor vehicle” but does not include “maxi-cab”, “motor-cab”, “tractor” and “road-roller”. The expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “road-roller” shall have the meanings respectively assigned to them in Sec. 2 of the Motor Vehicles Act, 1988 (59 of 1988).”

The above definition would include light vehicles as well. In fact, passenger cars used by the tourism industry should qualify as commercial vehicles, when they are licensed as public transport.

Notwithstanding such persuasive arguments, one has to bear in mind the classification in the Appendix prescribed under Rule 5 in pursuance of Sec. 32(1) for purposes of understanding the entry. Entries under Item III of Part A of the Appendix are relevant in this context. Entry 2 for which the prescribed rate is 15 per cent reads as under:

“(2) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after April 1, 1990.”

Entry 3(ii) for which the prescribed rate of depreciation is 30 per cent reads as under:

“(ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire.” It may, therefore, be seen that motor cars qualify for depreciation at 20 per cent unless run on hire to merit depreciation at 30 per cent. Entry 3(via) as now inserted by the Income-tax (Third Amendment) Rules, 2009, reads: “(via) New commercial vehicle which is acquired on or after January 1, 2009, but before April 1, 2009, and is put to use before April 1, 2009, for purposes of business or profession, [See paragraph 6 of the Notes below this Table]”.

In the light of the definition of commercial vehicles reproduced earlier and reading the entries harmoniously, it would mean that commercial vehicles referred are other than cars falling under Entry 2 and 3(ii). The amendment to the rule is obviously intended to cover only trucks and other heavy vehicles, besides other commercial vehicles hitherto entitled to depreciation at 30 per cent.

So Depreciation Rate will be as Follows for Commercial Vehicles

ProductDepreciation rate

(if purchased on or  before 30th September 2008)

Depreciation rate

(if purchased after 30th September up to 31st December 2008)


Depreciation rate(if purchased on or after 1st Jan 09 to 31st March 09)
Commercial Vehicle30%50% of 30%50%

Note : the above date been further extended to 30Th September 2009. please check our article on the same at the link given below:-

Date of Purchase for higher rate of depreciation on Purchase of Commercial Vehicle extended to 30th September 2009

More Under Income Tax

Posted Under

Category : Income Tax (20661)
Type : Notifications (11043) Notifications/Circulars (21806)

Search Posts by Date

July 2016
MTWTFSS
« Jun  
 123
45678910
11121314151617
18192021222324
25262728293031