Depreciation at the rate of 50% cannot be claimed in respect of vehicles given on lease

Dy. CIT Vs Pradip N Desai (Gujarat High Court)- The assessee company is a leasing company which is engaged in leasing of plant and machinery, motor cars, etc. to its client. It is neither the case of the assessee nor is there anything on record to indicate that the assessee uses the vehicles in question in its business of transportation or that the assessee is engaged in the business of hire.

In the circumstances, the basic requirement for being entitled to depreciation at the higher rate of 50 per cent under Entry No. III (2)(ii) of Appendix-I to the Rules is not satisfied by the appellant. In other words, appellant does not pass the test for the applicability of Entry No. III(2)(ii) of Appendix-I appended to the Rules, viz., the user of the vehicles in the business of the assessee of transportation or the business of hire. The Tribunal was, therefore, justified in holding that the appellant is entitled to depreciation at the rate of 33.33 per cent and not at the rate of 50 per cent as claimed by it.

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

TAX APPEAL No. 417 of 2003

DY.C.I.T.(A) – Appellant(s)

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