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Issues involved: Determination of depreciation rate on trucks used in business.
Summary: The High Court of Rajasthan considered a case where the Income-tax Appellate Tribunal referred a question regarding the depreciation rate applicable to trucks used in business. The assessee, engaged in quarrying and stone sales, claimed depreciation at 40% for the assessment year 1981-82. The Commissioner of Income-tax set aside the initial allowance of 40% and directed it to be restricted to 30%. The Tribunal later allowed the appeal by the assessee, granting depreciation at 40%. The main contention was whether the trucks were used for hiring purposes or solely for the assessee's business. The Court analyzed the provisions of the Income-tax Act and the Depreciation Table in the Income-tax Rules. It noted the distinction between vehicles used for hire and those used for personal business. The Central Board of Direct Taxes classified certain vehicles under specific entries for depreciation rates. In this case, since the trucks were primarily used for the assessee's mining business and not for hiring, they were entitled to depreciation at 30% under Entry No. III(ii)D(9) and not at 40% under Entry No. III(ii)E(1A). The Court emphasized that the registration of trucks as "public carriers" did not alter their eligibility for depreciation, as the key factor was whether they were used for hiring. The judgment concluded that the assessee was entitled to depreciation at 30% and not 40%, as the trucks were predominantly utilized for its own business activities. The decision favored the Revenue, holding that the assessee's case fell under Entry No. III(ii)D(9) and not Entry No. III(ii)E(1A). The answer was returned to the Tribunal accordingly, with no costs imposed.
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