2021 (10) TMI 121 - HC - Income Tax

Depreciation on the vehicles used by the assessee - @15% OR 30% - vehicles for which depreciation is claimed are stated as oil tankers transporting fuel from Indian Oil Corporation Ltd (IOCL) and Bharat Peroleum Corporation Ltd. (BPCL) to the retail outlets - HELD THAT - Entitlement of depreciation at 30% of the motor vehicles/tankers used by the assessee for running the business is no more res integra and considered in favour of the assessee in the appeal filed by the assessee - See USHA JOHNSON PROPRIETRIX, M/S. GLOBAL ROADWAYS, (NOW KNOWN AS MARUTHAYATH TRANSPORTS) 2020 (11) TMI 1015 - KERALA HIGH COURT . - Decided against revenue.

Summary

Issues:
1. Claim of higher depreciation under Income Tax Rules, 1962
2. Classification of business activity for depreciation claim
3. Validity of Tribunal's findings on depreciation claim

Analysis:
1. The appellant, aggrieved by the Income Tax Appellate Tribunal's order, filed an appeal regarding the eligibility to claim higher depreciation under Clause III (3) (ii) of Appendix I to the Income Tax Rules, 1962 for the Assessment Year 2008-09. The appellant contended that the Tribunal erred in dismissing the appeal and not allowing the higher depreciation. The High Court, after considering the arguments, found in favor of the appellant, stating that the entitlement of depreciation at 30% for motor vehicles used in the business had been previously established in a similar case, ITA No.96/2015. Therefore, the appeal was allowed in favor of the appellant.

2. The issue of whether the business activity of the appellant, involving the use of motor lorries for transporting fuel from oil corporations to retail outlets, qualified for higher depreciation was also raised. The Department had treated the vehicles as eligible for only 15% depreciation, while the appellant claimed 30% depreciation under Appendix-I. The High Court, after reviewing the case and referring to previous judgments, upheld the appellant's claim for higher depreciation at 30% for the motor vehicles used in the business activity. The Court found that the business activity of transporting fuel met the criteria for claiming higher depreciation under the relevant provisions.

3. The validity of the Tribunal's findings on the depreciation claim was also challenged, with the appellant arguing that the Tribunal's decision was contrary to the documents on record. The High Court, after examining the facts and legal provisions, concluded that the Tribunal's findings were not in line with the evidence presented. The Court found the Tribunal's decision to be erroneous and held in favor of the appellant, allowing the appeal and granting the higher depreciation claim for the motor vehicles used in the business. The judgment in ITA No.96/2015 was cited as a precedent supporting the appellant's claim, leading to the decision in favor of the appellant in this case, ITA No.12/2021.