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TMI Blog2006 (5) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... eciation is allowable. The vehicles were plied on hire for the persons only who purchased the material from the assessee. It is not in dispute that the vehicles were not hired to outside parties. Under sub-item 2(ii) of Item III of Appendix-I to the Income-tax Rules, 1962 higher rate of depreciation is admissible on motor buses, motor lorries and motor taxies used in a business of running them on hire. The case of the assessee is that the vehicles were purchased with an intention to carry on business of hiring of vehicles and it registered its activity in the name of 'Sridevi Mini Transport' with the Labour Department. 3. The Assessing Officer analysed the facts and circumstances of the case to draw the inference that the assessee was not doing the business of transportation of goods on hire. The assessee mainly used lorries for its own business and occasionally gives it on hire for transporting the goods purchased from its shop to the customers' place. Thus, the transportation facility was only a value added service given to the customers who purchase steel and cement. Since the vehicles were not given on hire for outside persons who purchased materials from other shops the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer in the light of the decisions referred to by the Assessing Officer and further observed that the assessee has not carried on any business of transportation of goods on hire' and merely utilises the vans for delivering steel and cement products as and when customers required it and such use cannot be equated to using the vehicles in the business of hire. In other words, learned CIT(A) was of the opinion that the activity is incidental to the part of the main activity of purchase and sale of steel and cement products. He also noticed that though the transport receipts were shown separately, the authorised representative accepted before him that sometimes the price is inclusive of sale price and products are delivered at the customers point. Under these circumstances, he concluded that the vehicles were not used in the transport business, but they were used in the business of purchase and sale of steel and cement products. Further aggrieved, the assessee is in appeal before the Tribunal. 7. The learned counsel appearing on behalf of the assessee submitted that the assessment was reopened on mere change of opinion, which is not permissible under law. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that higher rate of depreciation is allowable on the tippers. 9. In the alternative, it was submitted that section 32(1)(ii) comes into play when a particular asset forms part of a block of assets. It is only in the first year of purchase of an asset an enquiry requires to be made with regard to the rate of depreciation allowable on such asset. In the assessment year 1998-99, the Assessing Officer applied his mind to the issue and granted depreciation at 40 per cent on the mini vans. Thus it formed part of that block of assets on which depreciation at 40 per cent is allowable and no further enquiry need be made in the subsequent years in the light of the provisions of section 32(1)(ii) of the Act. 10. On the other hand, learned Departmental Representative strongly relied upon the orders passed by the tax authorities. Placing reliance upon the case law referred to in the order of the Assessing Officer, learned Departmental Representative submitted that in order to be entitled to higher rate of depreciation, the assessee has to carryon 'business of running vehicles on hire' whereas, in the instant case, the dominant activity was purchase and sale of steel and cement and, in fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer to reopen the assessment if higher rate of depreciation was availed contrary to law. 12. I have carefully considered the rival submissions and perused the record. Admittedly the assessee has plied mini vans for the purpose of transportation of steel and cement to the destination of its customers and it was not hired to any outsider. Thus, the dominant object was to carry on business of steel and cement and, to provide value added service to the customers purchasing steel and cement, it provided transport facility though, in some cases, transport charges were collected separately. There is nothing on record to suggest that substantial income of the assessee was from running the vehicles on hire, even if it is assumed that providing transport facility to its customers would amount to carrying on the business of running the vehicles on hire. 13. In the case of Kailash Chand Bagaria the Hon'ble Madhya Pradesh High Court analysed the provisions of section 32 of the Act read with the provisions in depreciation schedule and observed that if the dominant object was to carryon a different business, merely because vehicles were used to transport the goods dealt in the main b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely preceding year a claim was wrongly allowed, more particularly when there was no discussion in the body of the order to prove the application of mind, it cannot be said that it will bind the Revenue in the subsequent year and reopening of assessment would amount to change of opinion. 16. The next contention of the assessee is that the mini van having been included in the block of assets eligible for 40 per cent depreciation and considered as such for the immediately preceding year by the Assessing Officer the same cannot be taken out of said block to allow only 25 per cent depreciation in the assessment years under consideration in view of plain language of section 32(1)(ii) of the Act, which reads as under: "32.(1) In the case of depreciation of- (i) Buildings, machinery, plant and furniture, being tangible assets; (ii) .. owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed - (i) .. .. . (ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed" 17. In the light of the decision of the I.T.A.T., Chandigarh Bench (SB) in Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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