TaxTMI 
TaxTMI 
2023 (12) TMI 1118
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....the learned CIT(A) has erred by allowing the depreciation @ 30% on crawler cranes amounting to Rs. 1,32,63,680/- instead of eligible depreciation @ 15%, as the cranes are do not fall under the category of Heavy Motor Vehicles. 3. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the claim of the higher depreciation of the assessee ignoring the fact that it is nowhere provided in the Income Tax Act as well as in the Income Tax Rules that the cranes are motor vehicles and these are eligible for the higher depreciation. 4. On the basis of the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. 5. It is therefore prayed that the order of the Ld. CIT(A) may kindly be set aside that of the Assessing Officer be restored. 6. The assessee craves leave to add, alter, amend and/or withdraw any grounds of appeal either before or during the course of hearing of the appeal." 3. Succinctly, the factual panorama of the case is that assessee before us is a Private Limited Company. The assessee-company is engaged in the business of material handling....
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....ve will clear all doubts at or end. We hope you will consider the matter and will do the needful." 4. However, the Assessing Officer rejected the claim of the assessee and stated that the assessee was eligible for depreciation @15% and not @30% on these cranes. Therefore, Assessing Officer disallowed the excess depreciation claimed by the assessee on above two cranes i.e. Rs. 1,32,63,580/- and made the addition. 5. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before NFAC/Ld. CIT(A), who has deleted the addition. The ld CIT(A) noted that the basic question here is whether the cranes are to be considered as 'Motor lorries' and be allowed depreciation @ 30% or be treated as machinery and allowed depreciation @ 15%. This question was clearly answered by jurisdictional HIGH COURT OF GUJARAT in the case of Prasad Multi Services (P.) Ltd Vs. Deputy Commissioner of Income Tax, [2020] 122 taxmann.com 73 (Gujarat), wherein it was held as under: "Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of (Higher depreciation) - Assessment year 2011-12 - Assessee-company was engaged in business of hiring, opera....
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....s, same would not disentitle the assessee to claim higher depreciation. The Ld. Counsel also stated that where mobile crane may be registered on motor truck, used in business of running on hire, and registered as on heavy motor vehicle, would fall within expression "motor lorries" and hence, the assessee is entitled to claim depreciation at a higher rate. 9. After giving our thoughtful consideration to the submission of the parties and perusing the judicial decisions relied upon by the Ld. Counsel, we find that the issue involved in the present appeal is no longer res integra. The question as to whether where assessee was in business of hiring out cranes, even if, such cranes were also used for personal construction business, same would not disentitle assessee to claim higher depreciation, that is, the assessee is entitled to claim higher depreciation, and the issue was considered by various judicial forums across India. The Hon'ble jurisdictional High Court of Gujarat in the case of Prasad Multi Services (P.) Ltd. vs. DCIT [2020] 122 taxmann.com 73 (Guj)/[2020] 423 ITR 542 (Guj)[16-07-2019], held as follows: "24. It is not in dispute that similar issued had cropped up ....
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....tances. 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 some traverse which had not been taken." These observation were made in a case where taxation was in issue. 15. This Court in Parashuram Pottery Works Co. Ltd. v. ITO (106 ITR 1 at p.10 : 1977 SC 429 at p.435) stated : "At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity." ....
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.... 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 file any appeal against them. It, however, challenged the subsequent orders of the Tribunal, and while refusing to entertain the appeal, the Delhi High Court held that there was no reason to discard the principle of consistency which requires that when the revenue has accepted a particular view by not filing an appeal that view should be adhered to, unless there is a just cause for departure. The High Court deprecated the practice of pick and choose. 28. The basis of the rule of consistency seems to us, with respect, to be the classic observations of His Lordship Justice H.R. Khanna s....
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.... 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 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 ....
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....itigation 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 are used by the assessee for his own business of construction. There is thumping documentary evidence on record to indicate that the assessee is very much in the business of hiring. The depreciation at the higher rate could not have been declined merely on the assumption that the cranes might have been used by the assessee for his own business of construction. In fact, it would be an error to take the view that for the purpose of claiming depreciation a....
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....n 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 hire." In the alternative, the assessee claimed depreciation before the Tribunal on the basis of the C.B.D.T. Instruction No. 617 dated 13-9-1973, which has been reproduced in the order of the Tribunal, as under: "132. Fork lift trucks - Rate of depreciation prescribed in Part 1 of Appendix 1 to Incometax rules. Fork lift trucks would be classified under item III (ii) -D(9) of Appendix I to the Income-tax Rules, 1962 and wo....
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.... 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 : "Industrial truck carrier designed to transport materials within a factory area with maximum flexibility in making moves. Most industrial trucks permit mechanized pickup and deposit of the loads, eliminating manual work in lifting as well as transporting. Depending on their means of locomotion, industrial trucks may be classified as hand trucks or power trucks. Hand trucks with two wheels permit most of the load to be carried on the wheels, but some of the load....
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.... 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 difficult to move on soft or slippery ground, it is highly mobile on a firm footing and is easily moved over roads and highways. (See "Crane Hoist" - McGraw Hill - 'Encyclopedia of Science and Technology'). A crane is usually typed according to its undercarriage. Some of the cranes which undercarriage is not a truck are, 'crawler cranes' mounted on continuous tracks, the 'rail or locomotive crane' on special chasis with flanged wheels for use on rail....
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....sed 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 that the plea taken by the assessee that crane was an integral part of the motor vehicle on which it is mounted required ascertainment of facts and fresh investigation, amounts to imposing a burden on a person to prove something of which Court or Tribunal can take judicial notice. For example, if a witness deposes that he had seen a horse, the Court need not insist upon him for a proof of the anatomy of a horse and can take a judicial notice of horse as an animal. The Courts and Tribunals are not re....
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....irs 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 a reference, this Court (at page 1058) held: "What is relevant for the purposes of the present case is that during the period of the lease, the assessee was held to be the owner of the building. The Tribunal, in our view, was justified in holding that the assessee was the owner of the building, fixtures and fittings of Alpana Talkies within the meaning of section 32 of the Income-tax Act. Consequently, the assessee would be entitled to depreciation under section 32 of the Income-tax Act....
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....ed 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 Calcutta High Court in CIT v. Salkia Transport Associates [1983] 143 ITR 39. The dispute in this case was somewhat similar to the dispute in the case before us. Here also depreciation was claimed by the assessee in respect of motor vehicles claimed to be owned by it though not registered under the Motor Vehicles Act in its name. The Calcutta High Court held that the provisions of the Motor Vehicles Act, 1939, do not prevent a person from becoming the owner of the motor vehicles without registr....
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....e 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 subclause (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 postal acknowledgement received by the transferor if he has sent an application in this behalf by registered post acknowledgement due to the registering authority referred to in section 29A, together with a declaration that he has not received any communication from such authority refusing to grant such certificate or requiring him to comply with any direction subject to which such certificate may be granted; (b) the transferee shall, within thirty days of the transfer, ....
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.... 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 a person from becoming an owner of a motor vehicle without registration. On the contrary, the section makes it obligatory for an owner of a motor vehicle to get the vehicle registered and to display the certificate of registration before the vehicle is driven in any public place. Registration is not an essential pre-requisite for acquisition of owner ship of a motor vehicle but is an obligation cast upon the owner of a vehicle for the purpose of running of the vehicle in any public place. Therefore, in ....
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....ch 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 allowance 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 the case of Dy. CIT v. Pradip N. Desai (HUF) [2012] 21 taxmann.com 151/341 ITR 277 (Guj.), wherein this Court took the view that if the assessee is not involved in the business of hiring the vehicle on rent, then he is not entitled to claim higher depreciation under clause (2)(ii) of Entry-III of Appendix-I. There need not be any debate on the proposition of law as explained by this Court in the said judgment. However, as discussed above, there is thumping evidence on record to indicate that the assessee is inv....
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.... lorries, motor taxis, motor tractors." 12. The origin of word 'lorry' is uncertain. 'Lorry' means, (i) 'a large strong motor vehicle for transporting goods, etc.', (ii) 'a long flat low wagon', or, (iii) 'a truck used on railways or tramways', as per the Concise Oxford Dictionary. As per Webster's II New River Side University Dictionary, the word 'lorry', in the meaning relevant to the present context, would mean, 'a motor truck'. As per the Encyclopaedia Britannica, truck is 'also called lorry'. Thus, the expression 'motor lorries' in heading III E(1A) of Part I of Appendix I would mean 'motor trucks'. 12.1 'Truck' is introduced in following terms in the Encyclopaedia Britannica : "Truck also called LORRY is any motor vehicle designed to carry freight or goods or to perform special services such as fire fighting. The truck was derived from horse-driven wagon technology, and some of the pioneer manufacturers came from the wagon business. Because of their speed and flexibility, trucks have come to carry a quarter of the intercity freight in the United States, and they enjoy an almost total monopoly in intracity freight delivery. In 1896 Gottlieb ....
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....hanisms for raising and lowering a load. Power trucks are propelled by batteries and an electric-motor or by an internal - combustion engine with either a mechanical drive or a generator and electric-motor drive. Propane and diesel engines are used in place of gasoline engines on some types. The non-lift platform truck is used simply for hauling, but other power trucks are provided with mechanisms, usually hydraulic, for lifting the loads. Fork-lift trucks are quipped with a forklike mechanism on the front end designed to pick up loads on specially designed platforms, called pallets, elevate the load to the desired height, transport it, and deposit it at the desired location and height. Ram trucks have a single protruding ram for handling coiled material. The crane truck is a portable boom crane mounted on an industrial truck; it may be used with hooks, grass and slings for bundled or coiled material. The straddle truck resembles a gantry crane on four pneumatic - tired wheels; the operator rides above the inverted U-frame, within which the load - lumber, bar steel, or pipe is carried on elevating bolsters. Other common types include high and low lift platform trucks, moto....
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....cribed under the heading 'Crane' in Encyclopaedia Britannica, as under : "A commonly used type of small movable crane is the truck crane, which is a crane mounted on a heavy, modified truck. Such cranes frequently use unsupported telescoping booms; these are made up of collapsible sections that can be extended outward like the sections of an old nautical telescope or spyglass. The extension of the boom is usually managed hydraulically. Truck cranes make up in mobility and ease of transport what they lack in hoisting capacity." [Emphasis supplied] 14. Thus, a mobile crane mounted on a truck constitutes a single unit known as a 'truck crane' which is adapted for use upon roads for special services. The truck on which the crane is mounted is constructed and adapted specially to carry the crane. 14.1 'Goods carriage' as defined in section 2(14) of the Motor Vehicles Act, 1988 means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods. This definition is not confined only to carriage of freight which is narrower than the expression 'carriage of ....