Higher depreciation for reach stackers used on hire may apply when they function as motor lorries, not ordinary machinery.

A reach stacker registered as a non-transport mobile crane may qualify for higher depreciation at 40% when its functional use is as a heavy goods vehicle for cargo handling on hire, rather than as ordinary plant and machinery. The analysis turns on the vehicle's nature, utility, registration status and the statutory meaning of heavy goods vehicle under the Motor Vehicles Act, 1988. On that basis, a special-purpose industrial vehicle used on hire can fall within the depreciation entry for motor lorries in Appendix I read with rule 5(1A) of the Income-tax Rules, 1962, making the 25% rate inapplicable.

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Issues: Whether the assessee was entitled to higher depreciation at 40% on a reach stacker by treating it as a motor lorry used in the business of running it on hire, instead of depreciation at 25% as a general item of plant and machinery.

Analysis: The reach stacker was registered as a non-transport mobile crane, but the record showed that it was a heavy goods vehicle used by the assessee for cargo handling on hire. The Court examined the nature, utility, and registration of the vehicle, and also considered the statutory meaning of heavy goods vehicle under the Motor Vehicles Act, 1988. Relying on the functional character of the vehicle and the principle that a crane mounted and used as a special-purpose transport vehicle may fall within the expression motor lorries, the Court held that the reach stacker was not to be treated as ordinary machinery. The reasoning was supported by the view that such special-purpose industrial vehicles used on hire are covered by the higher depreciation entry in Appendix I read with rule 5(1A) of the Income-tax Rules, 1962.

Conclusion: The assessee was entitled to depreciation at 40% on the reach stacker, and the restriction to 25% was incorrect.

Ratio Decidendi: A special-purpose vehicle such as a reach stacker or mobile crane, when registered and used as a heavy goods vehicle for hire, may be treated as a motor lorry for the purpose of higher depreciation under the relevant income-tax depreciation entry.

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