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2015 (12) TMI 554 - ITAT HYDERABADRevision u/s 263 - denial of depreciation at 50% claimed and allowed by the A.O. on ‘new commercial vehicles’ - Held that:- As seen from the invoices, assessee has purchased EISHER Vehicle with 90PS Max. Eng. Power which was registered as ‘Campers Vans’ on 27.02.2009. The total value of this asset was at ₹ 13,38,235. Since this vehicle was purchased in the previous year relevant for A.Y. 2009-2010, assessee has claimed depreciation in that year at 50% as per the Rules. Since the vehicle was put to use for less than 180 days in that year, having been registered on February, 2009, assessee claimed only 25% (half of 50%) of the depreciation and opening WDV of this year stood at ₹ 10,03,676. Since assessee claim of 50% depreciation on that vehicle was made in earlier year and as no action was undertaken by the Principal CIT to modify that, we are of the opinion that Principal CIT erred in directing the A.O. to restrict the depreciation to 15% in this year. This action of the Principal CIT, without considering the facts on record cannot be upheld, leave alone on legal principles. Coming to the other asset which was acquired during the year, it was TATA ACE purchased at cost of ₹ 2,93,444 and registered as ‘goods carriage LMV’ on 27.04.2009. This vehicle was put to use as per the provisions before 1st October, 2009 during the year. Thus, it is entitled for depreciation at 50%. If at all, the Principal CIT would have to consider that there is an error, he should have restricted himself to the new vehicle acquired during the year. But he has considered restricting the amount even on the vehicle which was purchased in earlier year and on which depreciation was allowed at 50% in that year. In that regard, the action of the Principal CIT is not based on facts on record and no application of mind while considering the proceedings under section 263. Coming to the eligibility of depreciation at 50%, there is no dispute that under the Rules new commercial vehicles acquired between 01.01.2009 to 01.10.2009 are eligible for depreciation at 50%. Nowhere in the Rules it was prescribed that they are to ‘put to use in the business of running them on hire’. The Coordinate Bench in the case of Avanti Feeds Ltd., vs. DCIT, Circle 1(1), Hyderabad (2009 (1) TMI 543 - ITAT HYDERABAD) analysed the Rules as applicable between the period 01.10.1998 and 31.03.1999 and came to the conclusion that new commercial asset acquired during the above period was eligible for higher depreciation at 40% as applicable in that year. Since the Rule provides that new commercial vehicles put to use are eligible for depreciation at 50% which is an incentive provision, Principal CIT cannot restrict the same by bringing a new condition that they have put to use in the business of running them on hire, when the Rules does not prescribe so. In view of the above, we cannot approve the action of the Principal CIT in exercising the jurisdiction under section 263 to set aside the validly completed assessment under section 143(3). In view of that, the order of Principal CIT u/s 263 is set aside and that of the A.O. is restored. - Decided in favour of assessee.
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