Case Law Details
ACIT Vs Bharat Carriers ltd (ITAT Cuttack)
Under sub-item 2(ii) of Item III of Appendix I of the Income Tax Rules, 1962, higher rate of depreciation is admissible on motor trucks used in a business of running them on hire. Therefore, the user of the same in the business of transportation of the assessee is the test.
In Board Circular No.609, dated 29.07.1991 (SI. No. 244) it was clarified that where a tour operator or travel agent uses motor buses or motor taxis owned him in providing transportation services to tourists, higher rate of depreciation would be allowed on such vehicles. It is further clarified that higher depreciation will also be admissible on motor lorries used in the assessee’s business of transportation of goods on hire. The higher rate of depreciation, however, will not apply if the motor buses, motor lorries, etc.. are used in some other non-hiring business of the assessee.
Ld DR could not controvert the findings of fact that as per circular No.652 dated 14.6.1993, the motor lorries used in assessee’s business of transportation of goods on hire is eligible for higher depreciation @ 30%. In view of the same ITAT allows higher depreciation @ 30% on motor lorries used in assessee’s business of transportation of goods on hire.
FULL TEXT OF THE ORDER OF ITAT CUTTACK
This is an appeal filed by the revenue and cross objection filed by the assessee against the order of the CIT(A), 2, Bhubaneswar dated 24.8.2020 for the assessment year 2010-2011.
2. The revenue is aggrieved by the decision of the Ld CIT(A) in allowing 30% depreciation claimed by the assessee as against 15% to be allowed.
3. The facts of the case are that the assessee company is engaged in the business of transportation carriers of cars. During the course of assessment proceedings, the Assessing Officer noticed that in the profit and loss account for the year ended 31.3.2010, the assessee has claimed deduction of Rs.5,27,38,554/- for depreciation as per the Companies Act. He also noticed that depreciation @ 30% was claimed on commercial vehicle. The AO observed that since the assessee’s own business is transportation and the commercial vehicles as per the fixed assets/depreciation schedule are used in the assessee’s business, therefore, depreciation @ 15% is required to be allowed as against 30% claimed by the assessee. In view of above, the Assessing Officer added Rs.35,28,785/-towards excess claim of depreciation to the total income of the assessee.
4. On appeal, the CIT(A) allowed depreciation @ 30% to the assessee. Hence, the revenue is in appeal before the Tribunal.
5. We have heard the rival submissions and perused the record of the case. We find that the ld CIT(A) allowed the higher depreciation @ 30% to the assessee by observing as under:
“I have carefully examined the appellant’s submission and facts on record. The assessment record for the given year was called for and verified. Ongoing through the audited accounts and the profit and loss accounts for the year under consideration, it is seen that the assessee has effectively the only source of income from transportation charges of Rs.67,60,59,591/-. The only other heads of income is “other income” of Rs.2,38,263/-. Therefore, it is clear that the only business of the assessee is from transportation. The assessee is eligible for higher depreciation if the vehicles were running on hire which includes use in assessee’s business of transportation of goods on hire. The inference is that the vehicle that runs on hire would depreciate faster. Such view has become final and is no longer res-integra after the decision of Hon’ble Gupta Global Exim Pvt. Ltd. (2008) 305 ITR 132 SC. The Hon’ble Supreme Court held as under:
Under sub-item 2(ii) of Item III of Appendix I of the Income Tax Rules, 1962, higher rate of depreciation is admissible on motor trucks used in a business of running them on hire. Therefore, the user of the same in the business of transportation of the assessee is the test.
6.5 Further, in Circular No.652 dated 14.06.1993, it has been stated as under:
“ In Board Circular No.609, dated 29.07.1991 (SI. No. 244) it was clarified that where a tour operator or travel agent uses motor buses or motor taxis owned him in providing transportation services to tourists, higher rate of depreciation would be allowed on such vehicles. It is further clarified that higher depreciation will also be admissible on motor lorries used in the assessee’s business of transportation of goods on hire. The higher rate of depreciation, however, will not apply if the motor buses, motor lorries, etc.. are used in some other non-hiring business of the assessee.”
6.6 In view of the above, the assessee had correctly claimed higher depreciation for utilising the vehicles in his own business of transportation. Therefore, the ground of appeal is allowed.”
6. Ld DR could not controvert the findings of fact that as per circular No.652 dated 14.6.1993, the motor lorries used in assessee’s business of transportation of goods on hire is eligible for higher depreciation @ 30%. In view of above, we see no reason to interfere with the order of the ld CIT(A), which is hereby confirmed and the ground of appeal of revenue is rejected.
7. In the result, appeal of the revenue is dismissed.
8. The cross objection filed by the assessee is in support to the order of the ld CIT(A). Since we have upheld the findings of the ld CIT(A), the cross objection filed by the assessee has become infructuous, hence, dismissed.
9. In fine, the appeal of the revenue and cross objection of the assessee are dismissed.
Order pronounced on 17 /5/2022.
