TaxTMI 
TaxTMI 
2019 (7) TMI 1655
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....sed in hiring business under Section 32 of the Income Tax Act, 1961 ?" 3. The appellant-assessee had filed its return of income on 29th September 2011, declaring the total income of Rs. 80,64,260=00. The return was processed under Section 143(1) of the Act. The case was selected for scrutiny. Accordingly, a notice under Section 143(2) of the Act came to be issued on 28th September 2012 and further notice under Section 143(2) read with Section 129 of the Act was issued on 15th November 2013. 4. It appears from the materials on record that the appellant is engaged in the business of hiring, operation and maintenance of construction equipments. 5. The appellant claims depreciation at the rate of 30% on various types of cranes, viz. Telescopic Cranes, Rail for Tower Cranes, Tower Cranes, Mobile Tower Cranes, Crawler Cranes, Tower Crane Masts and Hydra Cranes. 6. The appellant was served with a show-cause notice, calling upon him to show-cause as to why depreciation at the rate of 30% should be allowed, having regard to the fact that the cranes referred to above do not fall in the category of Motor Bus, Motor Lorries and Motor Taxis used in the business of running them on....
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.... has mainly referred to hydra cranes. The assessee has only furnished RC Books in respect of Hydra Crane. But the assessee has failed to furnish any relevant material and supporting evi8dences to justify its claim of depreciation at higher rate in respect of telescoping crane, rail for tower crane, tower crane, mobile tower crane, crawler crane and tower crane masts. The assessee has placed reliance on the decision of ITAT in the case of Bothra Shipping Services however we observe that facts of the case of the assessee are clearly distinguishable from the facts of the above cited case of Kolkata ITAT. In the case of Bothra Shipping Services the issue in the appeal was pertaining to crane mounted vehicle, JCB and 400 wheel loaders which were registered as heavy or medium motor vehicle by RTO and were used in the business of hiring them out to other within ambit of expression motor lorries. However, in the case of the assessee it has used different kinds of cranes which are not mounted on the vehicle. We have noticed that Hon'ble Jurisdictional High Court of Gujarat in the case of Gujco Carrier Vs. DCIT (2002)122 taxman 2006 (Guj) held that motor vehicle like fire truck, fork lif....
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....eing satisfied with such reply, depreciation at the rate of 30% on the cranes in question was granted by the Assessing Officer while framing the assessment under Section 143(3) of the Act vide order dated 24th December 2009. Mr.Hemani would submit that once the claim of depreciation at higher rate (being 30%) came to be accepted by the AO in the past while framing the assessment under Section 143(3) of the Act, then keeping in mind the principle of consistency, it was not open to the department to once again raise the very same issue and deny depreciation at the rate of 30% on the cranes during the year under consideration. 15. Mr.Hemani, in support of his submissions, has placed strong reliance on a decision of the Supreme Court in the case of CIT v. Excel Industries Limited, (358) ITR 295 (SC). Mr.Hemani submitted that even otherwise all the Revenue authorities committed a serious error in taking the view that the appellant is entitled to claim depreciation only at the rate of 15% and not at the rate of 30%. It is submitted that the assessee is in the business of hiring as is evident from its finance. Mr.Hemani pointed out documentary evidence in support of his submissions to ....
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....ni pointed out that the "Telescopic Crane", "Crawler Crane" and "Hydra Crane" are registered with the RTO, and in such circumstances, the reasonings assigned by the Assessing Officer would not hold good for the purposes of claiming depreciation on such cranes. SUBMISSIONS ON BEHALF OF THE REVENUE : 21. Ms.Mauna Bhatt, the learned senior standing counsel appearing for the department, has vehemently opposed this Appeal. According to Ms.Bhatt, no error, not to speak of any error of law, could be said to have been committed by the Revenue authorities in passing the impugned orders. According to Ms.Bhatt, a finding of fact has been recorded by all the three Revenue authorities that the assessee is not into the business of hiring. The assessee is using the cranes for the purpose of his own business of construction. In such circumstances, according to Ms.Bhatt, there is no question of granting depreciation at the rate of 30%. 22. In support of her submission, reliance has been placed on a decision of this Court in the case of Deputy Commissioner of Income-tax v. Pradip N.Desai (HUF), reported in (2012)21 taxmann.com 151 (Gujarat). 23. Ms.Bhatt submitted that it is true that th....
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....ade to it would be res judicata in that the same question cannot be subsequently agitated." 14. One of the decisions referred to by the Full Bench was the case of Hoystead & Ors. v. Commissioner of Taxation, 1926 AC 155. Speaking for the Judicial Committee Lord Shaw stated: "Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be proper apprehension by the Court of the legal result either of the construction of the document or the weight of certain circumstances. If this were permitted litigation would have no end, except when legal ingenuity is exhausted. It is a principal of law that this cannot be permitted, and there is abundant authority reiterating that principle. Thirdly, the same principle - namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest so....
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.... did not strictly apply to the income-tax proceedings, yet in order to maintain consistency, the Revenue cannot be permitted to rake up stale issues all over again merely because the scope of appeal is wider than the scope of reference. In this case, the assessee had been granted exemption under Section 11 for a long period of years and without there being any change in the objects or activities of the assessee, the income-tax authorities sought to deny the exemption in a later year. In the case of Neo Polypack (supra), it was held that although the doctrine of res judicata is not applicable to the income-tax proceedings since each assessment year is independent of the other, yet where an issue has been considered and decided consistently in a number of earlier years in a particular manner the same view should continue to prevail in the subsequent years unless there is some material change in the facts. In the case of Allied Finance (P) Ltd. (supra), the Tribunal had decided an issue in favour of the assessee by two orders and those two orders were followed by the Tribunal in the subsequent appeals. The department had accepted the correctness of the basic two orders and did not fil....
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....ur of the assessee on the question raised, starting with the assessment year 1992-93, that the benefits under the advance licences or under the duty entitlement pass book do not represent the real income of the assessee. Consequently, there is no reason for us to take a different view unless there are very convincing reasons, none of which have been pointed out by the learned counsel for the Revenue. 29. In Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC) this court did not think it appropriate to allow the reconsideration of an issue for a subsequent assessment year if the same "fundamental aspect" permeates in different assessment years. In arriving at this conclusion, this court referred to an interesting passage from Hoystead v. Commissioner of Taxation [1926] AC 155 (PC) wherein it was said (page 328 of 193 ITR) : "Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be proper apprehension by the Court of the legal result either of the construction of the document or the weight of certain circumstances. If this were permitted litigation would have n....
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....rive benefits under the advance licence and the duty entitlement pass book and paid tax thereon. Therefore, it is not as if the Revenue has been deprived of any tax. We are told that the rate of tax remained the sane in the present assessment year as well as in the subsequent assessment year. Therefore, the dispute raised by the Revenue is entirely academic or at best may have a minor tax effect. There was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers." 33. Thus, in view of the above, in our opinion, the disallowance is not sustainable. The Revenue has tried to dismiss the entire issue in the name of a mistake but it does not appear to be a mistake. We are saying so, because even independent of the principle of consistency, the assessee has a good case on merits. 34. We fail to understand as to on what basis the Revenue authorities have come to the conclusion that the assessee is not in the business of hiring and that the main business of the assessee is construction. According to the Revenue authorities, the cranes ....
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.... of 10% was admissible being the general rate applicable to machinery. The Tribunal, rejected the plea of the assessee that crane was an integral part of the motor lorry on which it was mounted and was worked by the same machine which provided traction to the lorry, on the ground that this required ascertainment of facts and fresh investigation. The Tribunal also rejected the assessee's contention that benefit of depreciation at 30% should be given to it since it was given to 'fork-lift trucks' under Instructions No. 617 issued on 13-9-1973 by the C.B.D.T. classifying 'fork-lift trucks' under item III (ii-D 9) of Appendix 1. Under the heading 'Machinery and plant' of item III of Appendix 1, Part I of the Table of Rates at which depreciation is admissible, read with Rule 5 of the Income Tax Rules, various items of machinery and plant are specified with the rates at which depreciation is to be allowed as are mentioned against them. The assessee claimed depreciation at 40% on its crane under Item III E(1A) of Appendix 1, which reads as follows : "E. (1A) Motor buses, motor lorries and motor taxis used in a business running them on....
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.... and in World War II they largely replaced horse-drawn equipment. A notable vehicle was the four-wheel-drive, quarter-ton-capacity, short-wheelbase jeep, capable of performing a variety of military tasks." Lorry or truck would, therefore, mean not only any motor vehicle designed to carry freight or goods but also to perform special services like fire fighting. Fire engine also called fire truck is a self propelled mobile piece of equipment used in fire fighting. There can be other special services to be performed by motor vehicles designed for such services. Thus, a lorry i.e. truck adapted or designed to carry a crane is meant for special services of lifting load, moving it side by side, rotating it or moving it horizontally. Most industrial trucks permit mechanized pickup and deposit of the loads, eliminating manual work in lifting as well as transporting. The crane truck is a portable boom crane mounted on an industrial truck. It may be used with hooks, grabs, and slings for bundled or coiled material. Industrial trucks which would also come within the expression 'motor lorries' are described as follows in the Encyclopedia Britannica : ....
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....e' when used for an inanimate object means a machine for moving heavy objects usually by suspending them from a projecting arm or beam. Crane is any of a diverse group of machines that not only lift heavy objects but also shift them horizontally. Movable cranes are mounted on railway cars, motor trucks or chassis equipped with caterpillar treads and the hoisting machinery is mounted so as to counterpoise part of the load on the boom and thereby, preventing the entire crane from overturning while carrying the load. The fork lift truck, widely used for moving goods between warehouse storages and shipping vehicles, "is a highly manoeuvrable crane adaptable to handling drums, crates, or loaded skids or pallets." (See Encyclopedia Britannica under the heading `crane'). Thus, a 'fork-lift truck' is also a type of crane. The expression 'truck crane' is well known in the truck industry. "The truck crane is a unit consisting of a crane house and boom mounted on a truck chassis, ....... Originally assembled by contractors from crawler cranes and truck parts, the truck crane for years been manufactured and sold as a unit. Although the truck crane is d....
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.... when transported, as was suggested on behalf of the Revenue, will not be decisive. Unloading, in the context of truck crane where the crane remains mounted and attached to the truck when carried and even at the destination where it is put to use is not a relevant factor at all. Though not required to be loaded or unloaded like other goods transported in carriage of freight, the crane remains fixed, mounted on the truck which has been adapted for use solely for its carriage and such truck crane is used for special service of lifting and moving heavy objects. This is why such mobile crane is registered as a heavy motor vehicle which is a heavy goods vehicle as defined in section 2(16) of the Motor Vehicles Act. The approach of the Tribunal and the authorities below it that cranes are not mentioned specifically as an independent item falling in the categories for which higher depreciation allowance at the rate of 40% when used for hire and at 30% when not so used has been provided as against 10% of machinery in general, and therefore, they should be treated as falling in the general category of machinery, is an over-simplification of the matter. The approach of the Tribunal ....
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.... observed by the Supreme Court in R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (at page 578) has different meanings in different contexts and in certain circumstances even a lessee may be considered as the owner of the property leased to him. It was also held to be so by the Bombay High Court in CIT v. Alpana Talkies [1983] 139 ITR 1055. It was a case of a lease of a theatre for exhibiting films. Under the lease agreement, the lessee was to keep the theatre in good condition and make all repairs and the premises were to be surrendered with the fittings and fixtures and additions and alterations on the expiry of the lease period. The assessee demolished the theatre and constructed a new one during the period January-July 1962. In respect of the assessment years 1964-65 to 1969-70, the assessee claimed depreciation in respect of the theatre building, furniture and fixtures, plant, etc. The claim was rejected by the Income-tax Officer on the ground that the lessor had not divested himself of the ownership of the land and the building. The Appellate Assistant Commissioner and the Tribunal decided in favour of the assessee and held that the assessee was entitled to depreciation. On ....
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....utta High Court in CIT v. Steelcrete (P.) Ltd [1983] 142 ITR 45. This too was a case of rejection of a claim to depreciation and development rebate under sections 32 and 33 of the Act. The controversy was whether the assets in question were "owned by the assessee and used for the purpose of business". There was no real dispute in regard to the user of the assets for the purpose of the business. The sole question for determination was whether the machinery in question could be considered to be owned by the assessee for the purpose of section 32 of the Act. Relying upon the observations of the Supreme Court in R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570, the High Court observed that though the machinery in respect of which the depreciation was claimed stood in the name of the Government of India, to all real intents and purposes and also for purposes of section 32 of the Income-tax Act, 1961, it was intended that the property and the goods should pass to the assessee at the relevant time. Read in this context, it was held that the assessee owned the machinery in question and was entitled to depreciation. 8. Reference may also be made to another decision of the ....
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....usiness. 10. The various decisions including the decisions of the Calcutta High Court and the Kerala High Court which relate to the transfer of motor vehicles referred to above leave no scope for doubt that the transfer of ownership of a vehicle is not dependent upon the transfer of ownership being recorded under the Motor Vehicles Act. Section 31 of the Motor Vehicles Act, 1939 (corresponding to section 50 of the Motor Vehicles Act, 1988), so far as relevant, reads: "31. (1) Where the ownership of any motor vehicle registered under this Chapter is transferred,- (a )the transferor shall - (i )within fourteen days of the transfer, report the fact of transfer to the registering authority within whose jurisdiction the transfer is to be effected and shall simultaneously send a copy of the said report to the transferee; (ii)within forty-five days of the transfer forward to the registering authority referred to in sub-clause (i)-- (A)a no objection certificate obtained under section 29A; or (B)in a case where no such certificate has been obtained, - (I)a receipt obtained under sub-section (2) of section 29A; or (II)a....
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....at an assessee will not be entitled to depreciation allowance if he is not the owner of the buildings, machinery, plant or furniture unless he is the owner of the same (sic). Subsection (1A) of section 32, which came into effect from 1.4.1971 provides an exception to this rule but this subsection is confined to buildings only and does not extend to plant, machinery or furniture. But there is no provisions under the Motor Vehicles Act which requires registration of a motor vehicle in the name of a person for the purpose of acquisition of ownership of the vehicle. Section 22(1) of the Motor Vehicles Act which requires registration of motor vehicles is in the following terms : "(1) No person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place for the purpose of carrying passengers or goods unless the vehicle is registered in accordance with this chapter and the certificate of registration of the vehicles has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner." 15. The provision of this section does not prevent ....
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....es see, the assessee cannot be regarded as the owner of the buses. On the contrary, the essential pre-requisite for registration under section 22(1) of the Motor Vehicles Act, is ownership of a motor vehicle. Unless a per son is owner of a motor vehicle he is not entitled to get it registered in his name under section 22(1) of the Motor Vehicles Act. The Tribunal in this case has come to the con clusion on a review of the facts and also of the agreement that the assessee was the owner of the five new buses and as such was entitled to claim depreciation allowance on these buses. The Tribunal has not committed any error of law in coming to this conclusion. The requirement of section 34 of the Act, is that the vehicles must be 'owned by the assessee'. This section does not require that the assessee must be a registered owner of the vehicles in order to claim depreciation allow ance in respect of them. We are of the view that on the facts of this case the new buses were owned by the assessee within the meaning of section 32 and the assessee was entitled to claim depreciation allowance on these vehicles." 40. At this stage, we may also look into the decision of this Court in ....