2010 (1) TMI 382 - HC - Income Tax

Depreciation - The question raised pertains to the assessee s claim for higher rate of depreciation on tipper trucks and JCB mainly used for own business and partly let out to other parties. Held that- the main use of the vehicles should be to let on hire and not to use in the assessee s own business. Since the items were predominantly used in the assessee s own business thus the assessee is entitled to depreciation only at normal rate which is granted. Consequently the appeal is dismissed.

Summary

Issues:
1. Estimation of income under various heads modified by appellate authorities.
2. Claim for higher rate of depreciation on tipper trucks and JCB mainly used for own business and occasionally let out to other parties.

Estimation of Income:
The High Court addressed the first issue concerning the estimation of income under various heads, which had been modified by the appellate authorities. The court observed that no substantial question of law arose regarding the estimation of income under the two items covered by the appeal. Consequently, the court did not find any grounds for interference in this regard.

Claim for Higher Depreciation Rate:
Regarding the second issue, which involved the assessee's claim for a higher rate of depreciation on tipper trucks and JCB equipment, the court analyzed the claim in detail. The appellant contended that occasional letting out of the vehicles entitled them to a higher rate of depreciation. However, the court noted that the higher rate of depreciation was typically available for vehicles used in the business of running them on hire, such as motor buses, motor trailers, and motor taxies. Despite the appellant citing a Supreme Court decision in support of their claim, the court distinguished the facts of the present case. The court emphasized that for vehicles to qualify for a higher rate of depreciation, the primary use should be letting them out on hire, not for the assessee's own business. Since the vehicles in question were predominantly used for the assessee's business and only occasionally let out, the court held that the assessee was entitled to depreciation at the normal rate. Consequently, the court dismissed the appeal in this regard.

In conclusion, the High Court's judgment addressed the issues of income estimation under various heads and the claim for a higher rate of depreciation on specific vehicles. The court's analysis focused on the legal principles governing depreciation rates and the distinction between vehicles primarily used for business purposes versus those primarily let out on hire. The judgment provided a clear interpretation of the relevant rules and upheld the decision to grant depreciation at the normal rate based on the predominant use of the vehicles for the assessee's own business.