Brief of the case:
- In case of Kottinatu Transporters vs. CIT, The Hon’ble Kerala HC by disposing off write petition held that the tax deduction under a heading by payer, it cannot be determinative of character of income of payee. It was held by honorable High Court that letting out lorries can not be treated as contractual business merely because TDS was deducted u/s 194C instead of u/s 194I
- Thus, in the present case though the tax was deducted u/s 194C, but the payment was in nature of hire charges because the assessee was infact carrying on the business of letting lorries on hire. The Honorable High Court has allowed contention of assessee allowing him to claim the deduction of depreciation @30 % against the 15% allowed by AO as the nature of the business in original was of letting out the lorries even though the TDS has been deducted by considering the nature of income as contractual income
Facts of the case:
- The petitioner (assessee) is engaged in the business of letting out lorries owned by him on hire in the name of Kottinattu Transports. The petitioner has claimed depreciation @ 30% under the category ‘motor vehicles, lorries……..’ used in the business of running them on hire’.
- AO however, rejected the claim of assessee and allowed depreciation @ 15% because as per him the assessee has let out lorries under a contract, thus, the consideration received by him was not hire charges but it was only a contract receipt for letting out lorries on hire.
- Therefore, the assessee cannot be said to using the lorries in the business of running them on hire and for that reason depreciation allowable only @ 15%.
- The revision application filed by assessee was rejected by Commissioner of Income Tax , having no remedy the assessee filed a writ petition before Kerala HC.
Contention of Assessee:
Paid content
Become a Basic or Premium Member, or log in if you are already a Basic or Premium member.
