Depreciation on Wheel loaders & Graders as Motor Vehicles

DCIT Vs Quippo Construction Equipment Ltd. (ITAT Hyderabad)

The issue under consideration is whether the CIT(A) is correct in charging depreciation at the rate of 30% on wheel loaders and graders?

The assessee company, engaged in the business of infrastructure/construction equipment rental services. During the course of assessment proceedings, the AO observed from the depreciation chart claimed as per the I.T. Act that the assessee has claimed depreciation @ 30% on commercial vehicles. He observed that the assets comprised of the following which are not in the nature of “commercial vehicles”. The assessee was therefore, asked to explain as to why depreciation should not be restricted to 15%. Assessee state that depreciation @30% on crane, chasis, motor graders, wheel loaders, soil compactors, JCBs, concrete boom placers given on hire. At the outset, it is humbly submitted that as per Entry-III-(3)(ii) of Appendix-I of the I.T. Rules “Motor buses, motor lorries and motor taxis used in a business of running them on hire” are eligible for depreciation @30%. The AO however, was not convinced with the above reply, accordingly, the excess depreciation was disallowed and brought to tax.

ITAT states that, the assessee has filed the computation of depreciation allowable u/s 32 in the financial year 31.3.2012 wherein the Plant & Machinery and commercial vehicles were separately shown and depreciation has been claimed at 30% on such commercial vehicles. The details of the fixed assets on which depreciation has been claimed are also filed before us. On perusal of the same, ITAT find that the wheel loaders and graders are motor vehicles as held by the Coordinate Bench of this Tribunal in the case of NAC Infrastructure Equipment Ltd (Supra), assessee’s sister concern. Therefore, respectfully following the decision of the Coordinate Bench, they do not see any reason to interfere with the order of the CIT (A). Therefore, the Revenue’s appeals are dismissed.

FULL TEXT OF THE ITAT JUDGEMENT

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