2009 (2) TMI 400 - HC - Income Tax

High Court rules on depreciation rate for quarrying trucks.

COMMISSIONER OF INCOME-TAX Versus BIMALCHAND JAIN

COMMISSIONER OF INCOME-TAX Versus BIMALCHAND JAIN - [2010] 322 ITR 346 (Raj) Issues: Depreciation rate on trucks for a firm engaged in transportation business.Analysis:1. The Income-tax Appellate Tribunal referred the issue of depreciation rate on trucks for the assessment year 1987-85 to the High Court. The question was whether the assessee was entitled to depreciation at 40% or 30% on two trucks owned by a firm engaged in the purchase and sale of limestone and transportation work for Kota Thermal Power Project.2. The Appellate Assistant Commissioner allowed the higher rate of depreciation, but the Income-tax Officer disagreed, stating that the assessee was not primarily engaged in transportation business. The Tribunal upheld the Appellate Assistant Commissioner's decision, leading to the reference to the High Court.3. The Revenue argued that a similar issue had been addressed in a previous case, CIT v Manjeet Stone Company, where it was held that if the trucks were mainly used for the assessee's own business, depreciation should be at 30% and not 40%. The Division Bench concluded that the assessee's business was quarrying and selling stones, not primarily hiring out trucks, thus not qualifying for the higher depreciation rate.4. The High Court concurred with the Revenue's stance, ruling in favor of the Revenue and against the assessee. The Court held that the assessee's use of trucks primarily for its own business of carrying stones did not meet the criteria for the higher depreciation rate of 40%, as per the relevant provisions. Therefore, the assessee was entitled to depreciation at 30% only.5. The reference was disposed of with the High Court's decision in favor of the Revenue, emphasizing that the assessee's business activities did not align with the conditions for claiming a higher rate of depreciation on the trucks.