2019 (2) TMI 805 - AT - Income Tax

Reopening of assessment - A.O made disallowance of depreciation of trucks and dumpers to 15% as against 30% applicable to vehicles used in hire business - Held that - We observe that the assessee owns the trucks and dumpers as commercial vehicles and is using them for hiring business since last many years. The claim of depreciation @30% has been allowed in the preceding years, there is no dispute about the assets being put to use and ready to use for hiring business. This activity continued in the subsequent years also. These assets namely trucks and dumpers are part of the 30% block of the assets as on 1.4.2007 and WDV is shown at ₹ 19,48,988/- in the audited statement attached with Form 3CA of the Tax Audit Report. Depreciation is eligible on assets which are ready for use and which are already used immaterial of the fact that such assets were used in the year or not - thus the assessee is entitled for 30% depreciation on the WDV of trucks and dumpers which are purchased as commercial vehicle and consistently used in the running of hiring. Thus Ground of the assessee stands allowed.

Summary

Issues:
1. Validity of reopening the assessment under section 147 of the Income Tax Act.
2. Disallowance of depreciation on trucks and dumpers at 15% instead of 30%.

Analysis:

Issue 1: Validity of reopening the assessment under section 147 of the Income Tax Act
The appeal was filed by the assessee against the orders of the Ld. Commissioner of Income Tax (Appeals)-II, challenging the reopening of the assessment under section 147 of the Income Tax Act. The Ld. CIT(A) dismissed the assessee's ground challenging the reopening of assessment. The Tribunal found that since the disallowance of depreciation was deleted, the challenge to the validity of the reopening became academic. Thus, Ground No.1 was dismissed as academic.

Issue 2: Disallowance of depreciation on trucks and dumpers at 15% instead of 30%
The main issue in this appeal was the disallowance of depreciation on trucks and dumpers at 15% instead of 30%. The assessee contended that the trucks and dumpers were ready to use for hire business, even though they were not hired during the year under appeal. The Tribunal referred to a previous decision in the assessee's own case for Assessment Year 2009-10, where a similar issue was decided in favor of the assessee. The Tribunal held that the assets were part of the 30% block of assets and were ready to use for hiring business. Referring to relevant legal provisions and precedents, the Tribunal allowed the assessee's claim for 30% depreciation on the trucks and dumpers. Ground No.2 of the assessee was allowed based on this analysis.

In conclusion, the Tribunal allowed the appeal of the assessee, granting 30% depreciation on the trucks and dumpers. The order was pronounced on 13.02.2019, with the Tribunal dismissing Ground No.1 as academic and Ground No.3 being of a general nature not requiring adjudication.