Court grants full 30% depreciation allowance for vehicles given on hire

The court ruled in favor of the petitioner, who challenged the denial of depreciation allowance at 30% for vehicles given on hire. The court held that the petitioner, engaged in hiring trucks, should receive 30% depreciation, not limited to 15% based on the TDS certificate or nature of payment. Consequently, the court quashed the previous orders limiting depreciation to 15% and granted the petitioner the benefit of depreciation allowance at 30%, thereby disposing of the writ petition in favor of the petitioner.

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Issues:
Challenge to denial of depreciation allowance at 30% for vehicles given on hire.

Analysis:
1. The petitioner, engaged in letting out lorries on hire, challenged the denial of depreciation allowance at 30% for vehicles given on hire as per Exts.P2 and P5 orders.
2. The Assessing Authority, in Ext.P2 order, limited depreciation allowance to 15% stating that the petitioner was a contractor engaged in supplying/transporting goods, not running lorries on hire.
3. The Commissioner of Income Tax, in Ext.P5, upheld the Assessing Officer's findings without considering the petitioner's contentions, leading to the petitioner filing a Writ Petition seeking depreciation allowance per Income Tax Rules.
4. The respondents argued that the petitioner was in the business of transporting goods under a contract with M/S KSE Ltd., not running lorries on hire, hence eligible for 15% depreciation only.
5. The court considered the agreement between the petitioner and KSE Ltd., noting the rates per metric tonne for trucks supplied, and the TDS certificate issued.
6. Appendix 1 specified depreciation rates, with Clause III(3)(ii) allowing 30% depreciation for lorries used in the business of running them on hire.
7. The court found that the Assessing Authority and revisional authority referred to the petitioner as "letting out lorries on hire," making them eligible for 30% depreciation under Clause III(3)(ii) of Appendix I.
8. The court held that the petitioner, engaged in hiring trucks, should receive 30% depreciation, not limited to 15% based on TDS certificate or nature of payment.
9. Consequently, the court quashed Exts.P2 and P5 orders, granting the petitioner the benefit of depreciation allowance at 30%, and disposed of the writ petition in favor of the petitioner.

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