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2013 (8) TMI 968 - AT - Income TaxHigher rate of depreciation on the vehicles used for transporting assessee s own goods - Held that - The assessee is not engaged in the business of running the vehicles on hire. The facts prevailing in the decision rendered in the case of Kailash Chand Bagaria Vs. CIT and Another (2001 (4) TMI 80 - MADHYA PRADESH High Court ) wherein held held that the dominant purpose for which the assessee used the trucks has been found to be for his own business and hence the assessee is not entitled to higher rate of depreciation is identical to the facts prevailing in the instant case. Hence we do not find any infirmity in the decision rendered by the Ld. CIT(A) in holding that the assessee is not entitled for a higher rate of depreciation on the vehicles used in his own business. - Decided against assessee
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Eligibility for higher rate of depreciation on vehicles used for transporting own goods. Issue-wise Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The appeal was filed by the assessee with a delay of 5 days. The assessee requested the Bench to condone the delay, citing illness (fever) during the relevant period. The Tribunal, after considering the submissions, condoned the delay and admitted the appeal for hearing. 2. Eligibility for Higher Rate of Depreciation on Vehicles: The core issue was whether the assessee was entitled to a higher rate of depreciation (30%) on vehicles used for transporting its own goods, as opposed to the normal rate (15%). The assessee, engaged in quarry operations, used its vehicles to transport crushed rock to customers, primarily Indian Railways. The Assessing Officer (AO) restricted the depreciation to 15%, asserting that the higher rate applies only to vehicles used in the business of running them on hire, referencing the Supreme Court decision in Gupta Global Exim Pvt. Ltd. (305 ITR 132). The assessee argued that it collected transportation charges for each load supplied to Railways, thus engaging in the transportation business. The assessee relied on Circular No. 609 dated 29/07/1991 and the decision in CIT Vs. Stanes Tyres and Rubber Ltd (242 ITR 619) to support the claim for higher depreciation, asserting that vehicles used for hire or reward qualify for the higher rate. The Department Representative (DR) contended that the higher depreciation rate is applicable only to vehicles used in the business of running them on hire. Since the assessee used the vehicles for its own business, the transportation activity was incidental to the main business of selling metals. The Tribunal examined the work orders from Railways, which specified that the assessee was responsible for supplying and stacking the materials at the Railway site. The Tribunal noted that the vehicles were used to transport the assessee's own goods, not those owned by others, and control over the vehicles remained with the assessee. The Tribunal concurred with the CIT(A)'s view that the transportation of goods was incidental to the assessee's primary business of selling metals. The Tribunal referenced the Supreme Court's decision in Gupta Global Exim Pvt. Ltd., which clarified that mere receipt of transport charges does not qualify as running vehicles on hire. The Tribunal also cited the Madhya Pradesh High Court decision in Kailash Chand Bagaria Vs. CIT and Another (249 ITR 720) and the Karnataka High Court decision in Veneer Mills vs. CIT (201 ITR 764), both supporting the view that higher depreciation is not applicable when vehicles are used for the assessee's own business. The Tribunal concluded that since the assessee was not in the business of running vehicles on hire, it was not entitled to a higher rate of depreciation. The appeal was dismissed, and the order of the CIT(A) was confirmed. Conclusion: The Tribunal dismissed the appeal, holding that the assessee was not entitled to a higher rate of depreciation on vehicles used for transporting its own goods, as the transportation activity was incidental to its primary business. The decision emphasized that higher depreciation rates apply only to vehicles used in the business of running them on hire. The judgment was pronounced on 16-08-2013.
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