Higher depreciation for earth-moving vehicles used on hire was upheld under the motor lorries depreciation entry.

Higher depreciation at 30% was available for earth-moving vehicles and loaders used in a business of hiring them out, because vehicles registered as heavy or medium motor vehicles and fitted for excavation and limited movement of material could fall within the expression "motor lorries" in the relevant depreciation entry. The revisional view that the assets were not hired out was contrary to the record, so the restriction of depreciation to 15% under section 263 was unsustainable. On this basis, the assessee remained entitled to the higher depreciation rate.

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Issues: Whether the revisional order under section 263 of the Income-tax Act, 1961 was justified in restricting depreciation on earth-moving vehicles and loaders from 30% to 15%.

Analysis: The assessee had claimed depreciation at the higher rate on Tata loaders, JCB loaders and 400V wheel loaders used in its business of hiring out earth-moving vehicles. The vehicles were registered with the Regional Transport Officer as heavy or medium motor vehicles, fitted with diesel engines, hydraulic brakes and pneumatic tyres, and were used for excavation and limited movement of goods or material. The expression "motor lorries" in entry III(3)(ii) of Part A of Appendix I to the Income-tax Rules, 1962 was held to cover such vehicles, especially when used in a business of running them on hire. The revisional premise that the vehicles were not hired out was found contrary to the record. The Tribunal also relied on the settled position that excavators, mobile cranes and similar equipment registered as motor vehicles can fall within the relevant depreciation entry.

Conclusion: The revisional restriction to 15% depreciation was held unsustainable, and the assessee was held entitled to depreciation at 30%.

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