2016 (9) TMI 1189 - HC - Income Tax

Depreciation on pay loaders - nature of asset - Held that - Pay loaders are used on hire for excavation of soil and are also used equally for transport of the excavated soil. Pay loaders are also registered as motor vehicles with the road transport authorities. In that view of the matter the contention of the assessee was upheld. - Decided against revenue

Summary

Issues:
1. Interpretation of the term "motor lorries" for depreciation claim.
2. Validity of the order passed by the Income Tax Appellate Tribunal.
3. Classification of pay loaders as plant & machinery or commercial vehicles for depreciation purposes.

Analysis:
1. The primary issue in this case revolved around the interpretation of the term "motor lorries" for the purpose of claiming depreciation. The dispute centered on whether pay loaders could be categorized under the expression "motor lorries" to enable the assessee to claim depreciation at a higher rate. Initially, the assessing officer allowed the claim, considering pay loaders as motor lorries. However, the Commissioner of Income Tax intervened under section 263 and issued notices, leading to subsequent re-assessment proceedings.

2. The order dated 19th December, 2014, passed by the Income Tax Appellate Tribunal, "B" Bench, Kolkata, was under scrutiny in this case. The Tribunal dismissed an appeal filed by the revenue related to assessment years 2004-05 to 2007-08. On the other hand, cross objections and appeals filed by the assessee for the assessment years 2004-05 and 2005-06 were allowed by the Tribunal. The Commissioner of Income Tax (Appeals) upheld the contention of the assessee that pay loaders, being used for excavation and transport of soil and registered as motor vehicles, should indeed be considered as motor lorries.

3. The crux of the matter was the classification of pay loaders as either plant & machinery or commercial vehicles for depreciation purposes. The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal both supported the view that pay loaders should be classified as plant & machinery, in line with the assessee's argument. Despite the revenue's subsequent appeal challenging this classification, the Court, after due consideration, refused to admit the appeal. Consequently, the appeal was dismissed, affirming the classification of pay loaders as plant & machinery for depreciation purposes.