TaxTMI 
TaxTMI 
TaxTMI 
2016 (11) TMI 653
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....s, dozers and water tankers used by the assessee . 3. Facts apropos are that the assessee, engaged in the business of transport, had filed his return for the impugned assessment year declaring income of Rs. 35,79,790/-. During the course of assessment proceedings, it was noted by the Assessing Officer that assessee had claimed higher rate of depreciation @ 30% on pay loaders, dozers and water tankers. As per the Assessing Officer, higher rate of depreciation was available only for buses, lorries and taxies used in the business of running on hire. Explanation of the assessee was sought as to how it could claim higher depreciation. In reply it was submitted by the assessee that main part of his transportation business was done for M/s Anand ....
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....ess of hiring. According to him, earth moving machines and tipper were not road transport vehicles. For this, reliance was placed on the judgment of Andhra Pradesh High Court in the case of CIT vs Progressive Engineering Co. 230 ITR 729. Finally, he held that assessee was eligible for only 15% depreciation available for general category of machinery for the lorries, buses and pay loaders and like items used by it. Against the claim of Rs. 92,97,876/- the Assessing Officer allowed only Rs. 46,48,939/- thereby making a disallowance of Rs. 46,48,937/-. 4. Aggrieved, the assessee moved in appeal before the CIT(A). Argument of the assessee before the CIT(A) was that the Assessing Officer had failed to consider CBDT Circular No. 652(supra) in it....
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....Logistics Pvt. Ltd., CIT(A) came to the conclusion that assessee's business of transport included an element of 'hiring'. He was of the opinion that case of the assessee was supported by Circular No.652 (supra). Placing reliance on the judgment of Bombay High Court in the case of M/s S.C Thakur & Bros and Gauhati High Court in the case of ABC India Ltd (supra), he directed the Assessing Officer to allow depreciation @ 30%. 5. Now before us, the ld. DR, strongly assailing the order of the CIT(A) submitted that depreciation @ 30% given in Appendix 1 to Income Tax Rules 1962 at II(3)(ii) clearly mentions vehicles which are used in the business of running them on hire. As per the ld. DR, assessee was using his own vehicles for his own business....
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....agon. The said contract dated 3.7.2006 clearly mentions that assessee could use pay loaders, dozers, water tankers, tippers given by M/s Anand Transport in addition to what were used by it. The consideration agreed was @ Rs. .35/- per metric ton. What the assessee was doing for M/s Anand Transport is given under the terms of payment appearing in clause 4 of the agreement entered with M/s Anand Transport and it is reproduced hereunder: "4. Payment: Supply of Pay Loader for Hatch work, Loading Coal from Wharf using Pay loaders, Transporting to stock yard within Chennai port, Hi-stacking at Stock yard, Loading into trucks at Stock Yard by Pay Loader, Transporting to Railway siding by truck if necessary, Loading in to railway wagon, Railway ....
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.... buses, motor lorries, etc are used in some other non-hiring business of the assessee." 9. It is clear from the above clarification that motor lorries used by the assessee in the business of transportation of goods on hire would be eligible for higher rate of depreciation. In other words, by virtue of this Circular, higher rate of depreciation @ 30% mentioned in Part II(3)(ii) of Appendix to the Income Tax Rules would get an extended meaning than what literally follows on their reading. The said clause is reproduced hereunder: "II Machinery and Plant.... 3(ii) Motor buses, motor lorries and motor taxis used in a business of running hem on hire 30%" The extended meaning would bring into its fold use of motor vehicles in a business of tra....
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....rtinent to note that CBDT Circular No. 652 dated 14.6.1993 on this subject states that assessee is entitled to higher rate of depreciation when the vehicles are used by the assessee in his own business of transportation of goods on hire. We also find that this issue is covered by the decision of the coordinate bench of this tribunal in the case of JCIT vs Avinash Transport in ITA No. 1909/Kol/2012 dated 13.8.2015 in favour of the assessee, wherein it was held that :- "The assessing officer concluded that when the dumpers are given on hire, the assessee would be entitled for depreciation at the rate of 30% . However, that is not the correct interpretation of law, because if the assessee is transporting the goods of other persons , then als....