2018 (10) TMI 296 - HC - Income Tax

High Court allows higher depreciation claim on dumper and Volvo vehicles

Pr. Commissioner Of Income Tax, Ajmer. Versus Shri Amar Singh Bhandari, C/o Harsh Palace

The High Court upheld the decision of the Income Tax Appellate Tribunal, ruling in favor of the assessee regarding the depreciation claim on dumper and ... Higher rate of Depreciation on vehicles used for hire purposes - AO denied depreciation @ 30% - whether subject dumper and Volvo do not fall within the expression of motor buses, motor lorries and motor taxies, ? - Held that:- It is not in dispute that the assessee has earned rental income from these vehicles. The requirement of the provision stands satisfied, in wake of such finding recorded by none other than the Assessing Officer himself. The Commissioner (Appeals) has tried to non-suit the assessee on the ground that the subject dumper and Volvo do not fall within the expression of motor buses, motor lorries and motor taxies, as provided in Entry No. III (3)(ii) of Part-A of Appendix-1. It is pertinent to note that the depreciation for motor buses, motor lorries and motor taxies has been provided under the Head-III Machinery and Plant, wherein Clause (ii) of Entry No.III (3) deals with the motor buses, motor lorries and motor taxies, while Clause 3(iii) concerns with commercial vehicles. As such, if the vehicles in question are not held to be falling in subclause (ii) of Clause (3), they would well fall in sub-Clause (iii) of the Clause 3 of Entruy No. III of Appendix-1, entailing even higher rate of depreciation to the assessee. The expression used in sub-clause (ii), namely motor buses, motor lorries and motor taxies is having wide amplitude and the term motor lorries used therein, would take in its sweep the subject vehicles, i.e., dumper and Volvo. Thus as the vehicles in question were used for hire purposes, the assessee cannot be denied depreciation @ 30%. - Decided in favour of assessee. Issues:1. Disallowance of depreciation by Assessing Officer.2. Rejection of appeal by Commissioner (Appeals).3. Allowance of appeal by Income Tax Appellate Tribunal.Analysis:1. The assessment for the Assessment Year 2011-2012 disallowed depreciation claimed by the assessee on dumper and Volvo, stating that the higher rate of depreciation was not permissible due to the assessee's mining business. The Commissioner (Appeals) upheld this decision, but the Income Tax Appellate Tribunal allowed the appeal, stating that the term 'motor lorry' in the rules includes 'dumper' and 'Volvo Machines.'2. The Commissioner (Appeals) rejected the assessee's appeal, affirming the Assessing Officer's decision to confine the claim of depreciation. However, the Tribunal allowed the second appeal, emphasizing that the higher rate of depreciation was applicable beyond just motor buses, motor lorries, and motor taxies used for renting on hire.3. The Tribunal found that the subject vehicles were used by the assessee for both mining purposes and renting them out, concluding that the assessee was entitled to depreciation at the higher rate. The Tribunal clarified that the rules did not mandate exclusive use of vehicles for hire and reward to claim higher depreciation.4. The expression 'motor lorries' in the rules was interpreted broadly to include vehicles like dumper and Volvo, extending the scope of higher depreciation to the assessee. The Tribunal emphasized that since the vehicles were used for hire purposes, the assessee could not be denied depreciation at the increased rate.In conclusion, the High Court upheld the decision of the Income Tax Appellate Tribunal, ruling in favor of the assessee and allowing the appeal regarding the depreciation claim on dumper and Volvo vehicles used for both mining operations and renting out.