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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether a works contractor is entitled to deduction under rule 6(2)(d) of the Andhra Pradesh General Sales Tax Rules, 1957 for depreciation on vehicles or trippers, maintenance expenses on such vehicles, and consumables used in execution of the works contract.
Analysis: Section 5F of the Andhra Pradesh General Sales Tax Act, 1957 levies tax on the turnover representing transfer of property in goods involved in execution of works contracts, and rule 6(2) permits specified deductions in determining taxable turnover. The phrase "charges for obtaining on hire or otherwise machinery and tools used for the execution of the works contract" was construed broadly. The expression "or otherwise" was held to be used in an all-inclusive sense and not to be restricted by ejusdem generis. The deduction provision was therefore read to cover amounts spent on machinery and tools in forms other than actual hire charges, including the proportionate wear and tear of own machinery identified as depreciation. On that reasoning, the contractor was also entitled to deduction for the connected maintenance expenses and consumables used for execution of the works contract.
Conclusion: The assessee was entitled to the deductions claimed, and the disallowance made by the revisional authority and affirmed by the Tribunal was set aside.
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