Revisional jurisdiction and depreciation on hired mobile cranes: higher depreciation applies when cranes function as motor lorries.

Revisional jurisdiction under section 263 is sustained where the record available at the time of examination shows that the assessment order is erroneous and prejudicial to revenue, including an unsupportable allowance of higher depreciation. Mobile cranes hired out in business were treated as falling within the depreciation entry for motor lorries used in the business of running them on hire, because their functional and structural characteristics aligned with that category. Depreciation at 40% was therefore available, and the contrary 25% rate for plant and machinery did not apply. The commentary records partial relief, with revisional interference upheld but the higher depreciation claim allowed.

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Issues: (i) Whether the revisional jurisdiction under section 263 was validly assumed in respect of the assessment order passed under section 143(3). (ii) Whether mobile cranes hired out in business were entitled to depreciation at 40% as motor lorries used in the business of running them on hire, or only at 25% as plant and machinery.

Issue (i): Whether the revisional jurisdiction under section 263 was validly assumed in respect of the assessment order passed under section 143(3).

Analysis: The relevant record available to the revisional authority at the time of examination is the proper basis for testing whether the assessment order is erroneous and prejudicial to the interests of revenue. On that basis, the allowance of higher depreciation without support in the material then available justified revisional interference.

Conclusion: The assumption of jurisdiction under section 263 was valid and the revisional order was sustainable on this issue.

Issue (ii): Whether mobile cranes hired out in business were entitled to depreciation at 40% as motor lorries used in the business of running them on hire, or only at 25% as plant and machinery.

Analysis: The determining question was whether the cranes, being mobile units mounted on motor vehicles and used on hire, fell within the expression of motor lorries for the depreciation entry. The reasoning accepted that mobile cranes with the relevant attributes and use were akin to motor lorries and that the contrary authorities dealing with rigs and compressors did not govern the issue because those items were not treated as integral parts of motor lorries. The allowance depended on the functional and structural character of the cranes as mobile hired vehicles.

Conclusion: The assessee was entitled to depreciation at 40% on the mobile cranes.

Final Conclusion: The challenge to the revisional assumption failed, but the assessee succeeded on the depreciation question, resulting in partial relief.

Ratio Decidendi: Where a mobile crane is structurally and functionally part of a hired motor vehicle and falls within the relevant depreciation entry for motor lorries used in the business of running them on hire, it is entitled to the higher rate of depreciation; revisional interference under section 263 is justified when the assessment order allowing the claim is erroneous and prejudicial to revenue on the record then available.

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