2013 (7) TMI 879 - AT - Income Tax

'Reach stacker' qualifies as 'motor lorry' under Income-tax Rules, entitling assessee to 40% depreciation.

M/s FIS Logistics Private Ltd. C/o Salarpuria Jajodia & Co. Versus ACIT., Circle-5, Kolkata

The Tribunal held that the 'reach stacker' qualifies as a 'motor lorry' under the Income-tax Rules, entitling the assessee to claim depreciation at 40%. ... Depreciation on reach stacker - 25 per cent. or 40 per cent - whether it falls under the head 'motor lorries as envisaged in Entry III E (1A) of Part I of Appendix-I? - Held that:- From the facts in entirety, we are of the view that 'reach stacker' which is a sophisticated mobile crane manufactured by TIL Limited with a brand name RSL 45 is nothing but motor car also called motor lorries under the heavy goods vehicle. 'Heavy goods vehicle' as per section 2 of the Motor Vehicle Act, 1988 means any goods carriage the gross weight of which, or a tractor or a road roller the unladen weight of either of which, exceeds 12,000 kilograms. Certificate of registration issued by the Regional Transport Officer, Kohima, Nagaland as mobile crane having vehicle No. NL 01 G 1810 proves that 'reach stacker' is a mobile crane under the heavy goods vehicle. Nature and utility of the 'reach stacker' will clear the type of vehicle and help us to come to the conclusion that 'reach stacker' is nothing but a industrial motor car and/or industrial motor lorries. It is a special type of industrial truck which provides special services of lifting load, moving it side by side, rotating it or moving it horizontally. Most industrial trucks permit mechanized pick up and deposit of the loads, eliminating manual work in lifting as well as transporting. It will thus, be clear that motor vehicles like fire trucks, fork lifts trucks, crane trucks and reach stacker which are designed for special services fall within the category of 'motor trucks' (also called 'motor lorries'. Even the Revenue in future assessment years has allowed the claim of the assessee. Once fall under this category, the assessee is entitled the depreciation at 40 per cent. and this view is supported by case of Gujco Carriers v. CIT [2002 (2) TMI 48 - GUJARAT High Court] - Decided in favour of assesse. Issues Involved:1. Whether the 'reach stacker' qualifies as a 'motor lorry' under Entry III E (1A) of Part I of Appendix I of the Income-tax Rules for the purpose of claiming depreciation at 40%.Issue-wise Detailed Analysis:1. Classification of 'Reach Stacker' as a 'Motor Lorry':Facts and Contentions:The assessee is engaged in the business of cargo lifting and handling and claimed depreciation at 40% on a 'reach stacker,' which they argued falls under the category of 'motor lorries' used in the business of running them on hire. The Assessing Officer (AO) restricted the depreciation to 25%, contending that the 'reach stacker' does not qualify as a 'motor lorry.' The Commissioner of Income-tax (Appeals) [CIT(A)] upheld the AO's decision, stating that the 'reach stacker' is registered as a 'H.G.V. non-transport' and is essentially a mobile crane used within port areas, not for transporting goods over roads.Legal Analysis:The CIT(A) highlighted that the 'reach stacker' is classified as a 'mobile crane' and not a transport vehicle according to the registration certificate. The CIT(A) referenced the case of Shriram Transport Finance Co. Ltd. [2002] 254 ITR 558 (Mad), where it was held that a mobile crane could not be considered a road transport vehicle. The CIT(A) concluded that the 'reach stacker' does not meet the criteria for a 'motor lorry' and thus, the depreciation rate should be 25%.Assessee's Argument:The assessee argued that the 'reach stacker' is a heavy motor vehicle as defined under Section 2 of the Motor Vehicles Act, 1988, and should be eligible for 40% depreciation. They provided evidence that the 'reach stacker' was used for hiring purposes and referenced a favorable assessment order for the year 2007-08 where 40% depreciation was allowed.Tribunal's Findings:The Tribunal found that the 'reach stacker' is indeed a heavy goods vehicle as per the Motor Vehicles Act, 1988, and is used for hiring purposes. They noted that the vehicle's unladen weight exceeds 12,000 kilograms, fitting the definition of a heavy goods vehicle. The Tribunal also observed that the 'reach stacker' is used for specialized services such as lifting and moving heavy loads, akin to the functions of motor lorries.Precedent and Conclusion:The Tribunal relied on the Gujarat High Court's decision in Gujco Carriers v. CIT [2002] 256 ITR 50 (Guj), which held that a mobile crane mounted on a truck constitutes a single unit known as a 'truck crane' and is eligible for higher depreciation. The Tribunal concluded that the 'reach stacker' falls under the category of 'motor lorries' and is entitled to 40% depreciation.Judgment:The appeal of the assessee was allowed, and it was held that the 'reach stacker' qualifies as a 'motor lorry' under Entry III E (1A) of Part I of Appendix I of the Income-tax Rules, thereby entitling the assessee to claim depreciation at 40%.Result:The order of the CIT(A) was set aside, and the appeal of the assessee was allowed, granting the claimed depreciation of 40%.Pronouncement:The order was pronounced in the open court on July 11, 2013.