Depreciation on transport assets: specialised ammonia gas tankers qualified, but unused trucks failed the business-use test.

Specialised gas cylinders and tankers used to transport hazardous ammonia gas were treated as falling within the relevant depreciation entry, and 100% depreciation was allowed because the Revenue showed no distinguishing feature from earlier Ahmedabad Bench precedent. By contrast, depreciation on eight trucks/tankers was denied because mere readiness for use was insufficient on the facts: the agreement did not prove actual deployment, no trips had commenced for those vehicles, and no business use was established. Applying the requirement that an asset must be used for business purposes, the Tribunal held that the authorities relied on by the assessee did not assist it on these facts.

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Issues: (i) Whether 100% depreciation was admissible on gas cylinders/tankers used for transportation of ammonia gas. (ii) Whether depreciation was admissible on eight trucks/tankers which were claimed to be ready for use but were not actually put to use during the relevant year.

Issue (i): Whether 100% depreciation was admissible on gas cylinders/tankers used for transportation of ammonia gas.

Analysis: The claim related to specialised cylinders/tankers used for transporting hazardous ammonia gas and the Tribunal found the issue covered by an earlier decision of the Ahmedabad Bench allowing similar depreciation on such equipment. The asset was treated as falling within the relevant depreciation entry and the Revenue did not demonstrate any distinguishing feature.

Conclusion: 100% depreciation on gas cylinders/tankers was correctly allowed, in favour of the assessee.

Issue (ii): Whether depreciation was admissible on eight trucks/tankers which were claimed to be ready for use but were not actually put to use during the relevant year.

Analysis: The Tribunal examined the agreement with the carrier, the dates of certificates and licences, and the actual operation of the vehicles. It held that mere readiness for use was insufficient on these facts because the agreement did not establish actual deployment of the eight vehicles, no trips had commenced for them, and no taxable profit from their use was shown. Applying the requirement that the asset must be used for the purpose of business, the Tribunal concluded that the broader line of authorities relied upon by the assessee did not assist it on the facts.

Conclusion: Depreciation on the eight trucks/tankers was not admissible, in favour of the Revenue.

Final Conclusion: The allowance of depreciation on the gas cylinders/tankers was sustained, but the claim relating to the eight trucks/tankers was disallowed, so the Revenue succeeded only in part and the assessee succeeded only in part.

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