TaxTMI 
TaxTMI 
2020 (8) TMI 598
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.... on various date of hearing of the case and thereby added the claim of depreciation to the tune of Rs. 33,42,185/- to the total income of the appellant. Although the appellant has furnished all the evidences and papers that has been asked for during the assessment proceedings. The Learned Assessing Officer has ignored that evidences and explanations of the appellant in totality with a reason and opinion on the body of the order that the explanation of the appellant are not acceptable in nature. 4. That the submission made by the appellant in response to the show cause notice on dt. 15.01.2016 as regards the claim of depreciation with supportive evidences and legal pronouncements has not been accepted by the learned Assessing Officer on preconceived notion and without application of judicious mind. 5. That the appellant carves, leave to add or to amend the grounds before or at the time hearing of this appeal. 2. Further the assessee vide letter dated 07.08.2020 has filed additional/revised grounds of appeal, which read as under :- 1. For that, the learned C.I.T.(A) has committed gross error of fact in not accepting the explanation of the Assessee and in simpl....
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....the findings of the learned A.O that vehicles against which depreciation claimed @30% are not motor lorries and further the vehicles were not actually given on hire, particularly when, both findings are contrary to the statutory provisions of law and the Appellant is lawfully entitled for depreciation @30% on those vehicles. Impugned addition thus, being not sustainable in the eye of law is liable to be deleted in the interest of justice. 3. That, the order U/s. 143(3) dated 10.02.2016 passed by the learned Assessing Officer for the Assessment year 2013-14 is unjustified, arbitrary, hypo-technical and bad in law. 4. That, the learned Assessing officer has passed the order having all materials and evidences in his hand without application of judicious mind with a preconceived notion. 5. That, the learned Assessing Officer has ignored the submissions made by the Appellant during the course of hearing of the proceeding and more over, have totally ignored the papers, documents, case laws and statement submitted on various date of hearing of the case and thereby added the claim of depreciation to the tune of Rs. 33,42,185.00 to the total income of the Appellan....
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....O also noted that the above items are not under the category of motor lorries as defined in the Income Tax Act regarding charging of depreciation as per Section 32 of the Act. In this regard the AO issued show cause notice dated 04.01.2016 requesting the assessee to show cause as to why the following 14 items should not be treated as plant and machinery, on which admissible rate of depreciation as per I.T.Act, 1961 is 15%. Only, motor buses, motor lorries and motor taxies used in a business of running of them hire is eligible for depreciation @30%. It was also mentioned by the AO that none of the following 14 items are coming under motor buses, motor lorries and motor taxies. It was further mentioned by the AO that no income from hiring the 14 items are shown in the profit and loss account for the F.Y.2012-2013. The pictures of the machineries/assets are as under :- 8. Against the show cause notice issued by the AO the assessee filed written submissions along with picture of the said impugned assets/machineries, which has been incorporated by the AO in the assessment order, are as under :- "Dear Sir, GVV Construction private limited is a private limited company....
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.... copy of the same, but nowhere in the details it was mentioned that, only 'motor lorries' were given on hire. There is possibility that item forming part of the plant and machinery other than 'motor vehicles/buses/lorries would have been given on hire. It was also observed by the AO that the onus lies on assessee to prove that only vehicles eligible for higher depreciation were given on hire. The assessee before the AO referred to the CBDT Circular No.609 dated 29.07.1991 and also cited many judgments by the assessee. The AO further noticed that for claiming higher rate of depreciation the assets must be fallen under the category of motor vehicles/buses/lorries as prescribed in the Income Tax Act. But here there is no such case. Accordingly, the AO recalculated the depreciation @15% as prescribed by the Income Tax Act under the plant and machinery on the 14 items totaling excess depreciation calculated Rs. 33,42,185/- and added back to the total income of the assessee. In addition to the above various other disallowances, the AO assessed the total income of the assessee at Rs. 4,16,88,061/-. 10. Feeling aggrieved from the order of the Assessing Officer, the assess....
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....tion and he also distinguished the case laws relied on by the assessee and Circular No.609, dated 29.07.1991. In support of his arguments, ld. CITDR relied on the following judgments :- i) Kailash Chand Bagaria [2002] 120 Taxman 201/249 ITR 720 (Madhya Pradesh): ii) Varindra Construction Company [2012] 19 taxmann.com 244 (Punj & Har); iii) Pradip N. Desai [2012] 21 taxmann.com 151 (Gujarat); and iv) Rural Communication and Marketing (P.) Ltd. [2020] 113 taxmann.com 121 (Delhi-Trib) 14. After hearing both the sides and perusing the entire material available on record and case laws cited by both the sides, we noticed that the assessee is engaged in the civil construction business and has claimed depreciation at a higher rate on 14 impugned machineries which is not prescribed as per the New Appendix I Part-A III(ii) appended to the Income Tax Rules, 1962, as amended from time to time. After going through the assessment order, we found that the assessee has himself accepted that there was a mistake in calculating the depreciation and he submitted correct depreciation chart as per Income Tax Act as Annexure-1 but it was not produced before us for o....
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....sessee had made a pray in its submission that few items out of 14 items as discussed above and few others on which depreciation @15% was being claimed, falls under the category of 'Motor Lorries' may be allowed for higher depreciation. Here pray of the assessee cannot be entertained because of the reason that the first condition (should be used on hire basis) is not fulfilled in any case. Also for any change in claim of depreciation, the assessee should have filed revise return of income for the said assessment year, which was not done by the assessee company. 15. From the above discussion, it is clear that the AO has disallowed depreciation only on 14 items/machines/assets out of 20 items/assets and calculated the excess depreciation claimed by the assessee on 14 items only which reads as under :- Assets Rate of depreciation Depreciation claimed (in Rs.) Depreciation actual allowable under I. T. Act, 1961 (inRs.) Excess claimed (in Rs.) Excavators 15% 2107286 1505432 601854 Concrete Mixture 15% 157247 115929 41318 Vibrator 15% 61813 43312 18501 Road Roller 15% 318894 180240 138654 Paver Finish....
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....f which or a motor car or tractor or road-roller the unladen weight of any of which, does not exceed 7,500 kilograms; 22. "maxicab" means any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward; 23. "medium goods vehicle" means any goods carriage other than a light motor vehicle or a heavy goods vehicle; 24. "medium passenger motor vehicle" means any public service vehicle or private service vehicle, or educational institution bus other than a motor cycle, invalid carriage, light motor vehicle or heavy passenger motor vehicle; 25. "motorcab" means any motor vehicle constructed or adapted to carry not more than six passengers excluding the driver for hire or reward; 26. "motor car" means any motor vehicle other than a transport vehicle, omnibus, road-roller, tractor, motor cycle or invalid carriage; x x x 28. "motor vehicle" or "vehicle" means any mechanically propelled vehicle adapted for use upon roads whether the power of 1 Subs. & ins. by Act. propulsion is transmitted thereto from an external or internal source and incl....
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.... his goods then he is not entitled to 40 per cent. depreciation allowance and only 30 per cent. depreciation is admissible. Learned counsel invited our attention to a decision of the Rajasthan High Court in the case of CIT v. Sardar Stones [1995] 215 ITR 350 , where almost in an identical situation, the assessee was a trader in stones and owned two trucks which were used for transportation of stones from the site of the mines to the depot of the assessee as well as to the customers' premises, The claim of the assessee therein was that the trucks were occasionally, used for hiring but to its sister concern when not in use by the assessee. The. assessee claimed depreciation at 40 per cent. on the trucks which was allowed by the Income-tax Officer, but subsequently the Commissioner of income-tax exercising his power under section 263 of the Income-tax Act came to the conclusion that the rate of depreciation at 40 per cent. is allowable only when the assessee was carrying on the business of running trucks on hire, accordingly, the reference was answered by the court in favour of the Revenue and against the assessee. Similar view was taken in another decision of the Rajasthan High C....