2018 (6) TMI 1609 - AT - Income Tax

Higher depreciation @ 30% on dumpers, trucks, excavator/JCB - AO disallowed the claim of the assessee on the ground that the assessee has not given these vehicles on hire - higher depreciation is not applicable when the assessee is not in the business of running the vehicles on hire - HELD THAT - In the present case, admittedly, the assessee is in the business of civil construction. The assessee had engaged his own Trucks for transporting earth to facilitate laying of roads. Assessee cannot be said to be in the business of hiring out his Trucks for removal of earth to make him entitled for higher rate of depreciation, as removal and transportation of earth are only sub-processes of his main business of laying of roads. The order of CIT (A) entitling the assessee for higher rate of depreciation on the premise that his motor vehicles were used for removal of earth and since the earth did not belong to the assessee, therefore, the use of his motor vehicles was on hire, in the opinion of this Court, is not correct, either on facts or in law as decided in Anamay Construction 2015 (10) TMI 2740 - MADHYA PRADESH HIGH COURT . The argument of the appellant that the shifting of soil from sites etc. would make him eligible for the definition of hiring on behalf of others is therefore not relevant in this case and in my opinion he will not be entitled for a higher rate of depreciation @ 30% as has been rightly held by the AO. The disallowance is accordingly upheld - Decided in favour of revenue

Summary

Issues:
Claim of higher depreciation on vehicles for civil construction work.

Analysis:
The appeal was against the order of the ld. CIT (A) for the assessment year 2009-10. The assessee, engaged in civil construction work, claimed higher depreciation on dumpers, trucks, and excavator/JCB at 30%. The AO disallowed the claim stating that the vehicles were not given on hire, making the higher depreciation inapplicable. The assessee challenged this before the ld. CIT (A) reiterating the claim. The ld. CIT (A) considered the issue and referred to case laws. The High Court of Madhya Pradesh and other cases were cited, emphasizing that using vehicles for civil construction work did not qualify as hiring out for higher depreciation. The ld. CIT (A) upheld the AO's decision, disallowing the claim of higher depreciation amounting to ?22,77,188. The decision was based on legal precedents and no contrary precedents were presented.

The Tribunal noted that despite repeated notices, the assessee did not appear for the hearing. The Tribunal examined the arguments of the ld. D/R and the material on record. The Tribunal concurred with the ld. CIT (A) and the legal principles cited in various High Court decisions. It was concluded that the assessee's use of vehicles for civil construction work did not meet the criteria for claiming higher depreciation. Therefore, the appeal of the assessee was dismissed, upholding the disallowance of ?22,77,188. The decision was pronounced in open court on 06/06/2018.