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TMI Blog1983 (9) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... transport of the same from Bombay to Secunderabad by road. It had claimed the latter amount as a deduction and was allowed by the ITO. The assessee had also claimed depreciation at 30 per cent on the crane which was also allowed. The Commissioner was of the view that the allowance of Rs. 50,000 as a revenue deduction and acceptance of the depreciation at 30 per cent were both erroneous and prejudicial to the revenue. On these two issues, he issued notice under section 263 and heard the case. It was the assessee's case that since the crane was purchased during the running of the business, it could be claimed as a revenue deduction. This argument did not appeal to the Commissioner. As for the rate of depreciation, the assessee's argument that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedure. If, however, those responsible for the accounts insist on their own way of adjustment, the auditor should at least see that the additional amount charged to each asset in this manner is clearly indicated on the balance sheet. Rather than permanently capitalise expenditure which is revenue in its nature, a better plan would be to treat the amount as deferred revenue expenditure and charge it off to revenue over a period of three to five years, as circumstances would admit." He pointed out that the assessee treated the expenditure as revenue expenditure in the accounts and, according to him, the above extract clearly supports the method of accounting in debiting it as revenue expenditure. He also cited authorities though not directl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, would work adversely against the assessee in respect of investment allowance, etc. It is the standard practice of accountants as well as revenue officers to accept such outlay as cost. He pointed out that any other view would be contrary to the established accountancy practice as well as decided case law. As for depreciation, he claimed that the assessee uses the machinery not for transport or earth-moving, but for the purposes as a crane for unloading the wagons, etc. Hence, according to him, it cannot be considered to be an earth-moving machinery nor could it be considered as a tractor because it runs on a tractor. He also opposed introduction of materials to identify the crane with some other entry. 3. We have carefully considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are, therefore, to uphold his order in this regard. 4. As for the depreciation rate to be adopted on the crane, we do find that the ITO had not applied his mind. The assessee had argued his claim only with reference to the entry relating to 'earth-moving machinery'. The entry no doubt requires that it should not only be an earth-moving machinery, but also employed in heavy construction work, such as dams, tunnels, canals, etc. Admittedly, the assessee was not using it in heavy construction work. The assessee, however, alternatively claimed it under the entry 'ropeway structures...' This also, as found by the Commissioner, is far-fetched. An attempt was made to have it treated as 'motor tractors' under entry 9A of section (sic) under spec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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