2018 (8) TMI 1967 - AT - Income Tax

Tribunal Upholds Depreciation Rates for Cranes

M/s. Prasad Multi Services Pvt. Ltd. Versus The ACIT, Circle-5, Ahmedabad

The Tribunal upheld the CIT(A)'s decision to allow 30% depreciation on Hydra Cranes and 15% on other types of cranes. Registration as motor vehicles and ... Higher Depreciation @ 30% on hydra cranes - cranes are used in the business of running them on hire - HELD THAT:- Hon’ble Jurisdictional High Court of Gujarat in the case of Gujco Carrier [2002 (2) TMI 48 - GUJARAT HIGH COURT] held that motor vehicle like fire truck, fork lift truck and crane truck which are designed for special services fall within the category of other trucks also called motor lorries. Motor crane was registered as a heavy motor vehicle and was an integral part of motor vehicles on which it was mounted and it was registered as heavy motor vehicles and that crane was used for lifting and moving goods. Mobile crane was also registered with RTO as heavy motor vehicle which was mounted on a truck. Lorry or truck would mean not only any motor vehicle designed to carry freight or goods but also to perform said services like fire fighting, therefore, a truck adopted or designed to carry a crane is mounted for such services on lifting load, moving it side by side, rotating it or moving it horizontally. Similarly the CBDT Instruction No.617 refer to folk lifting truck of higher rate of deprecation. On the perusal of the findings of the jurisdictional High Court in the case of Gujco Carrier it is clear that types of cranes having with the assessee are completely of different from categories mentioned in the decision of Hon'able jurisdictional High Court in the case of Gujco Carrier and in the instruction no.617 of the CBDT. We observe that all the 7 categories of cranes on which higher rate of depreciation were claimed were not integral part of truck crane as elaborated above in the judicial findings except the hydra crane being mounted on the truck on which the ld. CIT(A) has correctly allowed the higher rate of depreciation. - Decided in favour of assessee. Issues Involved:1. Denial of depreciation at 30% on various types of cranes by the AO and confirmation by the CIT(A).2. Grant of relief on Hydra Cranes by the CIT(A) and the appeal by the Revenue against this decision.Detailed Analysis:Issue 1: Denial of Depreciation at 30% on Various Types of CranesThe assessee claimed depreciation at 30% on several types of cranes, including Telescopic Crane, Rail for Tower Crane, Tower Crane, Mobile Tower Crane, Crawler Cranes, and Tower Crane Masts, arguing these were used in the business of running them on hire. The AO, however, allowed only 15% depreciation, stating that these cranes did not fall under the category of motor buses, motor lorries, and motor taxies as per the Income Tax rules.Upon appeal, the CIT(A) upheld the AO's decision for all cranes except Hydra Cranes, reasoning that these cranes are fixed types and not mobile cranes. The CIT(A) cited the Andhra High Court case of Commissioner Of Income Tax vs Progressive Engineering Co., emphasizing that merely mounting a crane on a truck does not qualify it for higher depreciation unless it is registered as a motor vehicle. The CIT(A) noted that the assessee failed to provide RC booklets for these cranes, which could have supported their claim.During the appellate proceedings, the assessee reiterated their eligibility for higher depreciation, referencing the Bothra Shipping Services vs. CIT-XII case. However, the Tribunal found the facts of Bothra Shipping Services distinguishable, as the cranes in that case were registered as heavy motor vehicles and used in hiring business. The Tribunal also referred to the Gujarat High Court decision in Gujco Carrier Vs. DCIT, which held that motor vehicles designed for special services fall within the category of motor lorries if registered as such.The Tribunal concluded that the assessee's cranes, except Hydra Cranes, did not qualify for higher depreciation as they were not integral parts of truck cranes and were not registered as motor vehicles. Thus, the Tribunal upheld the CIT(A)'s decision to allow only 15% depreciation on these cranes.Issue 2: Grant of Relief on Hydra CranesThe CIT(A) allowed 30% depreciation on Hydra Cranes, considering them mobile cranes eligible for higher depreciation. The Revenue appealed against this decision, arguing that the CIT(A) erred in granting this relief without considering the AO's detailed findings.The Tribunal noted that the assessee provided RC booklets for Hydra Cranes, supporting their registration as motor vehicles. The Tribunal also referenced the Gujarat High Court decision in Gujco Carrier, which supported higher depreciation for motor vehicles used for special services if registered as such.The Tribunal found no merit in the Revenue's appeal, agreeing with the CIT(A) that Hydra Cranes qualified for higher depreciation at 30%.Conclusion:The Tribunal dismissed both the assessee's and the Revenue's appeals, upholding the CIT(A)'s decision to allow 30% depreciation only on Hydra Cranes and 15% on other types of cranes. The judgment emphasized the importance of registration as motor vehicles and the specific use of the cranes in determining eligibility for higher depreciation rates.