2020 (4) TMI 609 - AT - Income Tax

Excessive rate of depreciation claimed on concrete pumps, Equipment Vehicle - @ 40% OR 15% - assessee by fixing the equipment i.e Concrete Pump etc. has made it a mobile Concrete Pump vehicle, which is a requirement for the business of the assessee and that the assessee has rightly claimed the depreciation @ 40% - HELD THAT - Concrete Pump etc. have been fitted by the assessee as per his own convenience but the same cannot be said to be a part of the commercial vehicle, whereas, the Chassis fitted on the vehicle is a part and parcel of the vehicle. In view of the above, the claim of the assessee of depreciation @ 40% on Concrete Pump and other related equipment, has rightly been reduced / disallowed by the lower authorities and the same has rightly been allowed @ 15%. So far as the Chassis is concerned, since the same is part and parcel of the vehicle, the assessee is entitled to depreciation @ 40%.

Summary

Issues Involved:
Rate of depreciation claimed on concrete pumps, equipment, and vehicles.

Analysis:

1. Issue: Rate of Depreciation
- The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the rate of depreciation claimed by the assessee on concrete pumps, equipment, and vehicles. The Assessing Officer disallowed the depreciation claimed at 40% and reduced it to 15% for Concrete Pump and Boot Pump. The assessee argued that the Concrete Pump was an integral part of the commercial vehicle, justifying the higher depreciation rate.

2. Assessing Officer's Decision
- The Assessing Officer disagreed with the assessee's claim, stating that the Concrete Pump was not an inherent part of the vehicle. Additionally, the depreciation claimed on the 'Chassis' attached to the vehicle was also disallowed.

3. Appellate Tribunal's Decision
- The Tribunal considered the arguments of both parties and examined the nature of the equipment. It concluded that while the Concrete Pump and related equipment were not part of the commercial vehicle, the 'Chassis' was an essential component of the vehicle. Therefore, depreciation at 40% was allowed only for the 'Chassis,' while the depreciation rate for the other equipment was reduced to 15%.

4. Final Verdict
- The Tribunal partially allowed the appeal, upholding the disallowance of higher depreciation on the Concrete Pump and related equipment but allowing the higher rate for the 'Chassis.' The decision was made based on the distinction between integral vehicle components and additional equipment added for business purposes.

This judgment clarifies the distinction between components eligible for higher depreciation rates based on their essential nature to the vehicle and those considered additional attachments. The decision emphasizes the importance of correctly assessing depreciation rates in accordance with the Income Tax Act to prevent unjustified claims.