Higher depreciation on hired motor vehicles upheld; debatable depreciation issues cannot be reopened by rectification or reassessment.

Payloaders, JCBs and 400V loaders registered as motor vehicles and used in a business of hiring them out were held eligible for higher depreciation as motor lorries. The tribunal followed its earlier decision in the assessee's own case and supporting High Court authority, treating the equipment as transport machinery for hire despite its primary excavation or lifting function. Rectification under section 154 was rejected because the depreciation question was debatable and not an apparent mistake. Reassessment under section 147 was also held invalid, since the same depreciation issue had already been examined in revision proceedings under section 263 and concluded in the assessee's favour.

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Issues: (i) whether payloaders, JCBs and 400V loaders used in the assessee's business of hiring them out were eligible for higher depreciation as motor lorries, (ii) whether rectification under section 154 could be invoked to reduce the depreciation on the ground of an apparent mistake, and (iii) whether reassessment under section 147 was valid after the same depreciation issue had already been examined in revision proceedings under section 263 and dropped.

Issue (i): whether payloaders, JCBs and 400V loaders used in the assessee's business of hiring them out were eligible for higher depreciation as motor lorries.

Analysis: The depreciation claim was examined in the light of the vehicles' registration as heavy or medium motor vehicles, their use in the business of running them on hire, and the settled view that such equipment, though primarily used for excavation or lifting, can fall within the expression motor lorries when functionally used as transport equipment for limited movement and special services. The earlier tribunal decision in the assessee's own case, together with supporting High Court decisions, was followed. The contrary decisions relied upon by the Revenue were held inapplicable on the facts.

Conclusion: The higher depreciation claim was upheld and the issue was decided in favour of the assessee.

Issue (ii): whether rectification under section 154 could be invoked to reduce the depreciation on the ground of an apparent mistake.

Analysis: Rectification under section 154 is confined to mistakes apparent from the record. Since the depreciation controversy involved competing legal views and required examination of facts and law, it was not an obvious or self-evident mistake. A debatable issue cannot be corrected in rectification proceedings.

Conclusion: The rectification action was held to be without jurisdiction and the issue was decided in favour of the assessee.

Issue (iii): whether reassessment under section 147 was valid after the same depreciation issue had already been examined in revision proceedings under section 263 and dropped.

Analysis: The revision proceedings had already examined the depreciation claim and culminated in dropping the proceedings after acceptance of the assessee's explanation. On that basis, reopening the same matter by the Assessing Officer was treated as unsustainable, following the principle that an issue once examined and concluded in favour of the assessee in revision cannot be reopened on the same material by a lower authority.

Conclusion: The reassessment was held to be invalid and the issue was decided in favour of the assessee.

Final Conclusion: The Revenue's appeals failed, while the assessee's cross objections succeeded, resulting in an overall outcome in favour of the assessee on all substantive issues decided.

Ratio Decidendi: Equipment such as JCBs, payloaders and similar loaders, when registered as motor vehicles and used in the business of running them on hire, may qualify for higher depreciation as motor lorries; and a debatable depreciation issue cannot be reopened by rectification or reassessment when it has already been examined and concluded in favour of the assessee in revision proceedings.

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