2016 (8) TMI 759 - AT - Income Tax

Disallowance of depreciation - depreciation claimed by the assessee on w.d.v. and new motor car purchased falling under the category of 50% block of depreciation which was not accepted by AO on the basis of specific observation that assessee s business is not of running cars on hire and assessee s claim of depreciation under 50% rate is not admissible - Held that - Assessee was having special block of asset for depreciation @ 50% in the preceding year and in the year under appeal on LMV i.e. Toyota Car which fits in the category of new commercial vehicle because it was purchased in March, 2009 and it clearly falls under the head machinery and plant at Sl.No.3(via) of New Appendix-I as it is acquired after 1st January, 2009 but before 1st October, 2009 and there is no dispute to the fact that this asset was put to use before the first day of October, 2009, therefore, assessee is eligible to claim depreciation under block rate 50%. - Decided in favour of assessee.

Summary

Issues:
1. Delay in filing appeal condonation
2. Disallowance of depreciation on motor vehicle

Delay in filing appeal condonation:
The appeal was directed against the order of ld. CIT(A)-IV, Baroda dated 13.03.2013 relating to Asst. Year 2009-10, framed by DCIT, Kheda Circle, Nadiad on 29/11/2011. The appeal was time-barred by 29 days, but the delay was condoned as the assessee had a reasonable cause due to awaiting the outcome of an application for rectification. The Tribunal accepted the delay condonation and proceeded to adjudicate the appeal.

Disallowance of depreciation on motor vehicle:
The case involved disallowance of depreciation on a motor vehicle purchased by the assessee, a limited company engaged in the business of marketing bidi. The Assessing Officer disallowed excess depreciation claimed on a new motor car, stating that as the assessee was not in the business of hiring cars, the depreciation rate should be 15% instead of 50%. The ld. CIT(A) upheld the disallowance. The Tribunal, however, considered the specific provisions of depreciation rates under the IT Rules and held that the assessee was eligible for claiming depreciation at 50% on the motor vehicle purchased in March 2009, falling under a special category for new commercial vehicles. Citing a similar case from the Mumbai Bench, the Tribunal allowed the appeal and deleted the disallowance of depreciation.

In conclusion, the Tribunal allowed the appeal of the assessee concerning the disallowance of depreciation on the motor vehicle, based on the eligibility criteria under the IT Rules. The judgment highlighted the specific provisions for claiming depreciation on assets and emphasized the importance of adhering to the prescribed rates based on the nature of the asset and the business activities of the assessee.