TaxTMI 
TaxTMI 
2017 (1) TMI 1333
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....nd the assessment under section 143(3) read with section 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 12.02.2015. While framing the assessment, the AO observed that the assessee claimed depreciation on Soil compactor of Rs. 18,60,000/-, JCB Excavator of Rs. 30,75,000/- and Tata Motor Grader of Rs. 37,87,500/- at higher rate @ 50% amounting to Rs. 43,61,250/-. However, in the opinion of the AO, the assessee was entitled for depreciation of Rs. 13,08,375/- @ 15% i.e. normal rate of depreciation and thus disallowed excess depreciation of Rs. 30,52,875/-. The assessee aggrieved by this order, preferred an appeal before ld. CIT (A), who after considering the submissions of the assessee dismissed the appeal. 3. Now the assessee is in further appeal before us. 4. The ld. Counsel for the assessee reiterated the submissions as are made in the written brief. The ld. Counsel submitted that the issue is whether Soil Compactor, JCB Excavator and Tata Motor Grade purchased by the assessee in the previous year are part of the heavy vehicles form part of the commercial vehicle or not. He submitted that JCB Excavator, Tata Motor Grader and S....
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....ee is entitled for depreciation @ 50% on JCB Excavator, Tata Motor Grader and Soil Compactor as claimed. We find that there are conflicting views by the Coordinate Benches of the Tribunal in respect of availability of the depreciation at higher rate. The ld. CIT (A) decided the issue in para 3.2.2 of his order by observing as under :- "3.2.2. (i) The facts of the case are that the appellant is engaged exclusively in the business of road construction work under PMGSY and other schemes made by the Government for rural development. During the year under consideration, the appellant claimed depreciation at higher rate of 50% on Soil Compactor, JCB Excavator and Motor Grader by treating them as 'commercial vehicle' which was restricted to 15% by the AO. (ii) During appellate proceedings, the appellate placed reliance on the definition of 'commercial vehicle' as given in New Appendix-I relating to rates of depreciation and justify its claim of depreciation @ 50% thereof. (iii) I have duly considered the assessment order, submissions of the appellant and the material placed on record. It is noted from item III sub item (1) of the New Appendix-I that depreciation....
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....pecified in section 64. (2) Without prejudice to the generality of the foregoing power, such rules may provide for - (a) The conduct and hearing of appeals that may be preferred under this Chapter (the fees to be paid in respect of such appeals and the refund of such fees); (b) The appointment, functions and jurisdiction of registering and other prescribed authorities; (c) The exemption of road-rollers, graders and other vehicles designed and used solely for the construction, repair and cleaning of roads from all or any of the provisions of this Chapter and the rules made thereunder and the conditions governing such exemption. (vi) thus, as per section 65 of Motor Vehicles Act, the State Government can made rules for the exemption of road-rollers, graders and other vehicles designed and used solely for the construction, repair and cleaning of roads from all or any of the provisions of this Chapter and the rules made thereunder and the conditions governing such exemption. This makes road rollers, graders etc. used solely for the construction of roads distinguishable from the commercial vehicles. (vii) It may be mentioned that the....
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....ances of the issue and also the relevant facts which have been deliberated upon in the fore-going paragraphs, we are of the considered view that the authorities below were justified in restricting the allowability of depreciation at 15% in respect of JCB Earth Movers. It is ordered accordingly." (viii) It may be mentioned that the Hon'ble ITAT in the above referred decision analyzed the issue in detail and considered various judicial pronouncements. Further, as per Rajasthan Entry Tax, the entry tax on Earth moving and mining machinery including hydraulic excavator, hydraulic dumper, tipper, heavy loader, backhoe loader, wheel loading shovel, wheel excavator, tracked excavator, compactor, mobile crane, road roller, dozer, grader, skid steer and parts thereof is 5% and Tyres, tubes and flaps of two wheeler, three wheeler and four wheeler motor vehicles, motor vehicles with more than four wheels or jeep trailers is 4% i.e. entry tax on earth moving machinery is higher than motor vehicles. Thus, a distinction is made between earth moving machinery and motor vehicles. (ix) Therefore, in view of the above discussion, it is held that the JCB Excavator, Motor Grader and ....
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.... it serves as a transport equipment as well and so long as it is registered under the Motor Vehicles Act, it is a motor vehicle within the meaning of the said term as held by the Supreme Court in the decision above referred. We, therefore feel that in a larger sense JCB answers the depreciation of motor lorry within the meaning of the entry referred above contained in the IT Rules. There is no dispute that the item is not let on hire by the assessee which is one of the items of business carried on by them. The argument of Senior Standing Counsel that the case decided by the Gujarat High Court is on different facts, appears to be true because there the crane in that case is mounted on the truck and the truck is admittedly entitled to depreciation at 40 per cent. When the crane mounted on the truck, the crane becomes mobile and when both are let out on hire as a mobile crane, the value of the crane also becomes part of the motor lorry entitling for depreciation on the combined value. Even though the facts in the Gujarat decision are different, we still feel the principle applied by the Gujarat High Court is applicable in this case also, because in this case JCB itself is functionally....