2017 (12) TMI 644 - AT - Income Tax

Disallowance of depreciation on Crawler Cranes and Dozers - entitled for depreciation @ 15% and not @ 30% as claimed by the assessee - Held that - It is not possible to include each and every type of vehicle in the depreciation schedule. Due to rapid industrialization, the various types of machines used in transport business are increasing day after day with each machine carrying out a particular type of activity in a more efficient manner. These machines do not find direct representation in the depreciation schedule. In such situation, the functional similarly with the nature of activity performed by the listed machine has to be done to determine under what category a particular machine would fall. We also found that CBDT vide Instruction No.617 dated 13.09.1973 has even included forklift in the category of motor vehicle entitled for higher depreciation of 30%. The Hon. Supreme Court in the case of Chairman Rajasthan State Road Transport Corp and Other-vs-Santosh and Others (2013 (5) TMI 965 - SUPREME COURT) have analyzed the definition of the term motor vehicle to hold even a tractor to be motor vehicle as it is capable of being adapted to run on public roads. Thus no merit in action of lower authorities for declining higher claim of depreciation at 30% on Crawler Cranes and Dozers. - Decided in favour of assessee.

Summary

Issues: Disallowance of depreciation on Crawler Cranes and Dozers @ 30%.

Analysis:
1. The appeal was filed against the order of CIT(A)-2 Mumbai for the assessment year 2011-12 regarding the disallowance of depreciation on Crawler Cranes and Dozers @ 30%.
2. The AO disallowed the depreciation, holding that crawler cranes and dozers were plant and machinery entitled to depreciation @ 15% instead of the claimed 30%.
3. The assessee argued that the vehicles were "motor lorries" used in the business of running them on hire and were entitled to higher depreciation.
4. The ITAT Mumbai Bench had previously allowed higher depreciation @ 40% for cranes in the assessee's own case for A.Y.1998-99.
5. The Tribunal found that the vehicles were part of transport vehicles entitled to depreciation @ 30% as per the relevant entry in the IT Rules.
6. The definition of "motor vehicle" under the Motor Vehicles Act 1988 was relied upon to determine if the vehicles qualified for higher depreciation.
7. The Tribunal held that registration under the Motor Vehicles Act was not mandatory for claiming higher depreciation.
8. Previous judicial decisions and instructions were cited to support the claim for higher depreciation on vehicles like crawler cranes and dozers.
9. The Tribunal concluded that there was no merit in the lower authorities' decision to decline the higher claim of depreciation on Crawler Cranes and Dozers.
10. As a result, the appeal of the assessee was allowed.

This comprehensive analysis covers the issues involved in the legal judgment, the arguments presented, relevant legal definitions, precedents, and the final decision of the Tribunal in favor of the assessee regarding the disallowance of depreciation on Crawler Cranes and Dozers at 30%.