2022 (5) TMI 1599 - AT - Income Tax

Depreciation on commercial vehicle - @30% or 15% - AO observed that since the assessee s own business is transportation and the commercial vehicles as per the fixed assets/depreciation schedule are used in the assessee s business, therefore, depreciation @ 15% is required to be allowed as against 30% claimed by the assessee - CIT(A) allowed depreciation @ 30% - HELD THAT - DR could not controvert the findings of fact that as per circular No.652 dated 14.6.1993, the motor lorries used in assessee s business of transportation of goods on hire is eligible for higher depreciation @ 30%. No reason to interfere with the order of the ld CIT(A), which is hereby confirmed and the ground of appeal of revenue is rejected.

Summary

Issues:
- Dispute over depreciation rate (30% vs. 15%)

Analysis:
1. The appeal and cross objection were filed against the CIT(A)'s order for the assessment year 2010-2011. The revenue contested the decision allowing 30% depreciation claimed by the assessee instead of 15%.

2. The Assessing Officer noted the assessee's claim of Rs.5,27,38,554/- for depreciation at 30% on commercial vehicles used in transportation business. The AO contended that 15% depreciation should be allowed as the vehicles were used in the assessee's business. Consequently, Rs.35,28,785/- was added to the total income for excess depreciation.

3. The CIT(A) granted 30% depreciation to the assessee, emphasizing the primary income source from transportation charges and the eligibility for higher depreciation due to vehicle usage in the transportation business. Citing relevant precedents and circulars, the CIT(A) justified the higher depreciation allowance.

4. The Tribunal upheld the CIT(A)'s decision, noting the circular specifying higher depreciation for motor lorries used in transportation of goods on hire. The Tribunal rejected the revenue's appeal, confirming the higher depreciation rate of 30% for the assessee.

5. The cross objection by the assessee supporting the CIT(A)'s order was deemed infructuous as the Tribunal upheld the decision. Consequently, both the revenue's appeal and the assessee's cross objection were dismissed.

In conclusion, the Tribunal affirmed the CIT(A)'s ruling allowing 30% depreciation for the assessee's commercial vehicles used in the transportation business, based on the specific usage criteria outlined in relevant circulars and legal precedents.