2013 (4) TMI 210 - AT - Income Tax

Higher rate of depreciation on security vans - 30% v/s 40% - Held that - Issue involved in the present case is no more res integra and is covered by decision of of assessee s own case for assessment years 2001-02 to 2003-04 wherein held that under item 2 ii of heading III PLANT AND MACHINERY of Appendix I of table of rate of depreciation, the higher rate of depreciation is admissible on motor buses, motor lorries and motor taxis used in a business of running them on hire In the present case the assessee has proved that it has used the security vans for transportation of cash valuables etc. It is not the case of the revenue that the assessee has not used the said security vans for its business of transportation of cash, valuables etc., or the same has not been used mainly for business of the assessee of transportation of cash, valuables etc. In case in CIT vs. Gupta Global Exim P. Ltd. 2008 (5) TMI 7 - SUPREME COURT the assessee s main business was importing timber longs and selling them. Whereas in the case before us, the assessee has proved that the transportation of cash and valuables was its main business. Thus the decision relied on by the DR in CIT vs. Gupta Global Exim P. Ltd supra is distinguishable and not applicable to the facts of the present case. That being so the revenue has failed to controvert the finding of the CIT A that the assessee is entitled to claim depreciation @ 40% on security vans - Revenue s appeal stands dismissed.

Summary

Issues involved:
- Dispute over the rate of depreciation claimed on security vans by the assessee.
- Interpretation of provisions regarding depreciation rates under the Income Tax Rules, 1962.
- Application of judicial precedents to determine the allowable rate of depreciation for security vans used in transportation business.

Detailed Analysis:

1. Rate of Depreciation Dispute:
The appeal pertains to a disagreement regarding the rate of depreciation claimed by the assessee on security vans used in their transportation business. The Assessing Officer (A.O.) allowed depreciation at 15% instead of the assessee's claim of 30%. The A.O. contended that the assessee was not engaged in the business of running the vehicles on hire, leading to the disallowance of the excess depreciation claimed. However, the ld. CIT(A) reversed the A.O.'s decision and allowed the higher rate of depreciation based on the assessee's business activities.

2. Provisions of Income Tax Rules:
The dispute primarily revolves around the interpretation of the provisions of the Income Tax Rules, 1962, specifically item III (2) (ii) of Appendix 1. The assessee argued that the higher rate of depreciation at 30% was applicable to security vans used for the transportation of valuables based on the nature of their business. On the other hand, the Revenue contended that the assessee did not meet the criteria for the higher depreciation rate as they were not primarily engaged in hiring out the vehicles.

3. Application of Judicial Precedents:
The Tribunal referred to various judicial precedents to support its decision. It cited the case of DCIT vs. M/s Brink's Arya India Pvt. Ltd. for assessment years 2001-02 to 2003-04, where it was established that the assessee's main business involved the transportation of valuables. The Tribunal upheld the higher rate of depreciation based on the business activities of the assessee, distinguishing it from cases where the main business was different from transportation services. The Tribunal also highlighted the decisions of the Hon'ble jurisdictional High Court and the Supreme Court in similar cases, affirming the Tribunal's findings and dismissing the appeals.

In conclusion, the Tribunal upheld the order of the ld. CIT(A) in favor of the assessee, allowing the higher rate of depreciation at 30% for security vans. The decision was based on established facts regarding the nature of the assessee's business activities and was supported by relevant judicial precedents. Consequently, the Revenue's appeal was dismissed, emphasizing the consistency in applying the depreciation rates for assets used in specific business operations.