2014 (7) TMI 1126 - AT - Income Tax

Higher rate of depreciation on lorries - 30% as claimed by assesse 0R 15% as per AO - Held that - As already noticed that the assessee is not engaged in the business of running the vehicles on hire. The facts prevailing in the decision rendered by the hon ble Madhya Pradesh High Court in the case of Kailash Chand Bagaria v. CIT 2001 (4) TMI 80 - MADHYA PRADESH High Court is identical to the facts prevailing in the instant case. Hence we do not find any infirmity in the decision rendered by the learned Commissioner of Income-tax (Appeals) in holding that the assessee is not entitled for a higher rate of depreciation on the vehicles used in his own business. Accordingly we confirm his order. - Decided against assesse.

Summary

Issues:
Rate of depreciation on lorries used by the assessee.

Analysis:
The appeal was against the Commissioner of Income-tax (Appeals)'s order regarding the rate of depreciation on lorries used by the assessee for letting out on hire to clay contractors. The Assessing Officer disallowed the higher rate of 30% claimed by the assessee and limited it to 15%, as the assessee was deemed not in the business of giving lorries on hire. The Appellate Tribunal considered the arguments presented by both parties. The authorized representative of the assessee cited various judgments to support the claim that the assessee was authorized to carry on the business of giving vehicles on hire, and the hire charges were declared as business income. On the other hand, the Departmental representative argued that the arrangement between the assessee and contractors did not qualify for the higher rate of depreciation.

The Tribunal referred to a previous co-ordinate Bench decision where it was held that the assessee, not being engaged in the business of running vehicles on hire, was not entitled to a higher rate of depreciation. The Tribunal analyzed the nature of the work orders and the business activities of the assessee to determine whether the use of lorries for transportation was incidental to the main business. It was noted that the assessee's primary business was supplying metals, and the transportation of metals was considered part of this business, not a separate hire business. The Tribunal also cited other court decisions and a Circular from the Central Board of Direct Taxes to support the conclusion that the assessee was not entitled to a higher rate of depreciation on vehicles used in their own business.

Based on the analysis and precedents cited, the Tribunal dismissed the appeal filed by the assessee, upholding the decision of the Commissioner of Income-tax (Appeals) to limit the depreciation rate to 15%. The judgment was pronounced on July 4, 2014.