Lorry hire vehicles qualify for 30% depreciation rate, development charges allowed as deductible expenses, Section 80IA remanded for fresh consideration

The ITAT Jodhpur allowed the assessee's appeal on depreciation claims, ruling that lorry hire vehicles qualify for 30% depreciation rate rather than the 15% rate applied by the AO, following the precedent in Amar Singh Bhandari case. The tribunal also allowed development charges as deductible expenses, citing Udaipur Mineral Development Syndicate precedent, holding that amounts debited under mercantile accounting system with corresponding liability entries are allowable. Regarding Section 80IA deduction, the matter was remanded to CIT(A) for fresh adjudication after the appellate authority failed to consider the assessee's additional ground submission during appeal proceedings.

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Issues involved:
The appeal concerns the order of the ld. Commissioner of Income Tax (Appeals) for A.Y. 2014-15, involving disallowance of depreciation on dumper, development charges, deduction u/s 80IA, and restriction of deduction u/s 80IA due to loss from business or profession.

Depreciation Disallowance on Dumper:
The ld. AO rejected excess depreciation claimed on lorry hire charges and restricted it to 15%, adding back Rs. 1,33,697 to the total income. The ld. CIT(A) upheld this decision citing relevant case laws. However, the Coordinate Bench of ITAT Jodhpur and the High Court clarified that depreciation on lorry hire charges should be at 30%. Consequently, the addition amount was quashed.

Development Charges Disallowance:
The ld. AO added back Rs. 16,70,400 for unpaid development charges to UIT, which the assessee treated as a liability in its accounts. Despite the absence of payment, the assessee debited the amount in the P & L a/c. The ld. CIT(A) confirmed the disallowance, emphasizing that expenses can only be claimed when actually paid. However, relying on a relevant High Court judgment, the ITAT quashed the addition, stating that the expenses are allowable.

Deduction u/s 80IA and Loss Restriction:
The appeal raised issues regarding deduction u/s 80IA and its restriction to zero due to a loss from business or profession. The assessee sought consideration of additional grounds related to these deductions, but the ld. CIT(A) did not address them. Consequently, the ITAT remanded ground nos. 3 and 4 back to the ld. CIT(A) for adjudication after providing the assessee with an opportunity in the set-aside proceeding.

Conclusion:
The ITAT allowed the appeal, setting aside the disallowance of depreciation on dumper and development charges. It remanded the issue of deduction u/s 80IA back to the ld. CIT(A) for further consideration. Ground nos. 1 and 2 were allowed, while ground nos. 3 and 4 were allowed for statistical purposes.

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