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2023 (12) TMI 1118 - AT - Income TaxExcess depreciation claimed on crawler cranes - depreciation @ 30% OR 15% - assessee company is engaged in the business of material handling and erection of heavy equipment on contract basis and providing equipment on hire during the year under consideration - whether the cranes are to be considered as 'Motor lorries' and be allowed depreciation @ 30% or be treated as machinery and allowed depreciation @ 15%? - HELD THAT - As relying on Gujco Carriers vs. CIT 2002 (2) TMI 48 - GUJARAT HIGH COURT assessee can claim higher depreciation on cranes @ 30%, therefore, we do not find any infirmity in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
Issues Involved:
1. Depreciation Rate on Machineries 2. Classification of Cranes as Heavy Motor Vehicles 3. Eligibility for Higher Depreciation on Cranes 4. Consistency in Tax Assessment Issue-wise Comprehensive Details: 1. Depreciation Rate on Machineries: The Revenue contended that the learned CIT(A) erred in directing the Assessing Officer to allow depreciation at 30% on machineries instead of the eligible rate of 15%. The CIT(A) allowed depreciation at 30% on crawler cranes, amounting to Rs. 1,32,63,680/-, instead of the eligible 15%, as the cranes do not fall under the category of Heavy Motor Vehicles. 2. Classification of Cranes as Heavy Motor Vehicles: The CIT(A) noted that the basic question was whether the cranes should be considered as 'Motor lorries' and allowed depreciation at 30% or treated as machinery and allowed depreciation at 15%. The jurisdictional High Court of Gujarat in Prasad Multi Services (P.) Ltd Vs. Deputy Commissioner of Income Tax held that RTO registration under the Motor Vehicles Act was not a sine qua non for claiming depreciation. The court found that cranes used in the business of hiring out, even if also used for personal construction business, are eligible for higher depreciation. 3. Eligibility for Higher Depreciation on Cranes: The CIT(A) followed the judgment of the Hon'ble Gujarat High Court, which allowed depreciation at the rate of 30%. The Revenue's argument was that the assessee had not debited any amount against RTO tax in its Profit & Loss account for the year under consideration, thus not justifying the higher depreciation claim. However, the CIT(A) found that the assessee, engaged in hiring out cranes, was entitled to higher depreciation even if the cranes were also used for personal construction business. 4. Consistency in Tax Assessment: The principle of consistency was emphasized, as the same issue had been decided in favor of the assessee in earlier years. The Hon'ble Gujarat High Court in Prasad Multi Services (P.) Ltd. vs. DCIT reiterated that the rule of consistency should be maintained unless there is a material change in facts. The court highlighted that the Revenue should not take different stands in different years for the same issue. Conclusion: The ITAT upheld the CIT(A)'s decision, allowing higher depreciation at 30% on cranes, following the binding judgments of the Hon'ble Gujarat High Court. The appeal of the Revenue was dismissed, affirming that the assessee was entitled to claim higher depreciation on cranes used in the business of hiring, even if also used for personal construction purposes. The order was pronounced on 21/12/2023.
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