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Issues Involved:
1. Applicability of Section 44AE to JCBs. 2. Eligibility of JCBs for higher depreciation rate at 40%. Summary: 1. Applicability of Section 44AE to JCBs: The primary issue was whether the assessee's JCBs qualify as "goods carriages" u/s 44AE of the Income-tax Act, 1961. The assessee, engaged in the business of hiring JCBs, claimed that JCBs are analogous to goods carriers and thus, the income should be computed u/s 44AE. The Assessing Officer (AO) rejected this claim, stating that JCBs are earth-moving machinery used for excavation and lifting heavy materials, not goods carriers like lorries and trucks. The Commissioner of Income-tax (Appeals) [CIT(A)] upheld the AO's decision, emphasizing that JCBs are categorized as earth-moving machinery and not goods carriages. The Tribunal agreed with the CIT(A), stating that JCBs cannot be termed as "goods carriages" by any stretch of imagination, and thus, the income from JCBs cannot be computed u/s 44AE. 2. Eligibility of JCBs for Higher Depreciation Rate at 40%: The alternative issue was whether JCBs are eligible for a higher depreciation rate of 40% u/s 32 of the Act. The AO allowed depreciation at 25%, considering JCBs as plant and machinery. The assessee contended that JCBs should be classified as motor vehicles eligible for 40% depreciation, citing the Supreme Court decision in Bose Abraham v. State of Kerala and the Gujarat High Court decision in Gujco Carriers v. CIT. The Tribunal noted that JCBs, used in the business of running them on hire, perform functions similar to motor lorries by transporting removed soil. Therefore, for the purpose of depreciation rates, JCBs can be treated as motor lorries and are eligible for a higher depreciation rate of 40%. The Tribunal directed the AO to allow depreciation at 40% on JCBs. Conclusion: The appeals were partly allowed, confirming the CIT(A)'s order on the applicability of Section 44AE and directing the AO to allow a higher depreciation rate of 40% on JCBs.
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