2017 (12) TMI 1478 - AT - Income Tax

Higher depreciation at 30% on Trailers, Dumpers & Motor Lorries, which were used for transportation business - CIT-A allowed the claim - Held that - Transportation business carried out by the assessee by using Trailers, Dumpers & Motor Lorries is not an incidental to the business of the assessee. Out of the gross receipts of ₹ 55,75,16,582/-, the assessee received ₹ 22,99,64,332/-. The ld. Departmental Representative failed to produce any material to show that the above finding given by the ld. CIT(A) is not correct. Therefore, by considering the facts and circumstances of the case, we are of the opinion that there is no infirmity in the order passed by the ld. CIT(A). - Decided against revenue

Summary

Issues Involved:
- Eligibility for higher depreciation on Trailers, Dumpers & Motor Lorries used in transportation business.

Detailed Analysis:

Issue 1: Eligibility for Higher Depreciation
The appeal by the revenue was against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2011-12. The assessee claimed higher depreciation at 30% on Trailers, Dumpers & Motor Lorries used for transportation business. The Assessing Officer disallowed the higher depreciation and granted only normal depreciation at 15%. The main contention was whether the transportation business was incidental to the main business of Clearing & Forwarding (C & F) agency. The Assessing Officer argued that transportation was incidental, while the assessee claimed it as a substantial part of the business.

Analysis:
During assessment, the Assessing Officer noted the nature of bills raised by the assessee, which included various charges besides transportation. The partnership deed indicated the main business as 'shipping, clearing and forwarding,' with transportation being considered incidental. However, the assessee argued that transportation was a significant part of the business, as evidenced by substantial receipts from transport contracts. The Commissioner of Income Tax (Appeals) found in favor of the assessee, considering the substantial revenue from transport business and directed the higher depreciation to be allowed.

Judgment:
The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) based on the substantial revenue from the transport business, indicating that transportation was not merely incidental. Citing relevant case laws, the Tribunal concluded that the assessee was eligible for higher depreciation due to the significant income from transport activities. Consequently, the appeal by the revenue was dismissed, affirming the allowance of higher depreciation on Trailers, Dumpers & Motor Lorries used in the transportation business.