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2015 (1) TMI 742 - AT - Income TaxClaim of higher rate of depreciation - whether equipment i.e. payloaders, JCBs and 400V loaders can be classified as plant and machinery for the purpose of depreciation and not as motor bus, motor lorry or any transport/goods vehicle? - Held that - Mobile crane of the assessee which admittedly was registered as a heavy motor vehicle, for the above reasons, clearly fall within the expression motor lorries (which means motor trucks) in heading III E (1A) of the Table in Appendix 1 under rule 5 since it was used by the assessee in its business of running the crane on hire. Therefore, wrong in holding that the assessee was not entitled to depreciation at 40 per cent on crane mounted on motor truck. - Decided in favour of assessee. Depreciation on Commercial Transport Vehicle claimed at @30% - recourse to section 154 by AO restricting the depreciation @15% - Held that - The issue could not have been taken by the AO u/s 154 of the Act in as much as the issue was debatable and it required investigation both on facts as well as applicability of law. In this view of the matter assessee s Cross Objection is liable to succeed. Accordingly Cross Objection of the assessee stands allowed. - Decided in favour of assessee. Reopening of assessment - depreciation on Tata & JCB loaders @ 40% are excessive whereas @25% is allowable - Order u/s 263 by the C.I.T. by dropping the proceedings after accepting the plea of the assessee - Held that - Once the issue has already been examined and held in favour of the assessee u/s 263 of the Act the same cannot be the subject matter of reopening by the AO. In this view of the matter we hold that the assumption of jurisdiction by the AO in this case was bad in law and accordingly we set aside the reopening.- Decided in favour of assessee.
Issues Involved:
1. Delay in filing the revenue's appeals. 2. Classification of equipment for the purpose of depreciation. 3. Jurisdiction under section 154 of the Income Tax Act. 4. Jurisdiction under section 147 of the Income Tax Act. Detailed Analysis: 1. Delay in Filing the Revenue's Appeals: The revenue's appeals were delayed by 68 days. The delay was attributed to various factors, including the transfer of jurisdiction. The counsel for the assessee had no objection to the tribunal condoning the delay. Consequently, the tribunal condoned the delay and admitted the appeals. 2. Classification of Equipment for Depreciation: The central issue was whether equipment like payloaders, JCBs, and 400V loaders should be classified as "plant and machinery" or as "motor bus, motor lorry, or any transport/goods vehicle" for depreciation purposes. The CIT(A) allowed depreciation at higher rates (40% for A.Y. 2004-05 and 2005-06, and 30% for A.Y. 2006-07 and 2007-08), which the revenue contested. The tribunal found that the issue was covered in favor of the assessee by the ITAT Kolkata Bench's decision in the assessee's own case for A.Y. 2006-07. The tribunal held that the equipment used in the business of leasing out earth-moving vehicles qualifies for higher depreciation rates as they fall under the category of "motor lorries" according to the Income-tax Rules, 1962. This view was supported by decisions from the Hon'ble Kerala High Court in CIT vs Gaylord Constructions and the Hon'ble Gujarat High Court in Gujco Carriers vs CIT. The tribunal upheld the CIT(A)'s order and decided the issue in favor of the assessee. 3. Jurisdiction under Section 154 of the Income Tax Act: The assessee contended that the AO erred in assuming jurisdiction under section 154 of the Act. The AO had invoked section 154 to restrict depreciation on loaders from 40% to 15%. The tribunal noted that section 154 mandates rectification of mistakes apparent from the record. Since the issue was debatable and supported by high court decisions in favor of the assessee, it was not an apparent mistake. The tribunal referenced the Hon'ble Calcutta High Court's decision in Harbans Lal Malhotra & Sons (P) Ltd vs ITO, which held that proceedings under section 154 were without jurisdiction when the issue required investigation and interpretation. Consequently, the tribunal quashed the AO's order under section 154 and allowed the assessee's cross objection. 4. Jurisdiction under Section 147 of the Income Tax Act: The assessee argued that the AO erred in assuming jurisdiction under section 147. The issue of depreciation had already been scrutinized and accepted in the original assessment order and by the CIT under section 263. The tribunal found that the CIT had examined and accepted the assessee's explanation regarding depreciation, thus dropping the proceedings under section 263. It was held that once an issue is decided in favor of the assessee under section 263, it cannot be reopened by the AO under section 147. This view was supported by the Hon'ble Madhya Pradesh High Court in CIT vs Indira Exports Pvt. Ltd. The tribunal held that the AO's assumption of jurisdiction under section 147 was unsustainable and set aside the reopening, deciding the issue in favor of the assessee. Conclusion: - The appeals filed by the revenue were dismissed. - The cross objections filed by the assessee were allowed. - The tribunal upheld the CIT(A)'s order regarding the classification of equipment for depreciation. - The tribunal quashed the AO's orders under sections 154 and 147, favoring the assessee.
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