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TMI Blog2010 (12) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided against the assessee - ITA No.818/Bang/2010 - - - Dated:- 23-12-2010 - P. Madhavi Devi, A. Mohan Alankamony, JJ. Atul K. Alur, Adv. for the Appellant D. Prabhakar Reddy, Addl.CIT(DR) for the Respondent ORDER Per: A. Mohan Alankamony: This appeal of the assessee firm - Magtron Earth Movers - is directed against the appellate order of Ld. CIT, Hubli, in ITA NO: 112/ CIT (A) HBL/08-09 dated: 26.3.2010 for the assessment year 2006-07. 2. The assessee firm ('the assessee') has raised five grounds in its grounds of appeal. However, on a perusal, the crux of substance of the issue is that - "the authorities below erred in restricting the depreciation at 15% as against 30% claimed on JCB Earth Movers." 3. Briefly, the assessee was the owner (and operating of) of JCB Earth Moving Machines. During the period under dispute, it had claimed depreciation @ 30% on such machines which was restricted to 15% by the AO on the perception that the actual depreciation allowable in respect of JCB Machines was only at 15%. 4. Aggrieved, the assessee took up the issue with the Ld. CIT(A) for solace. After due consideration of the assessee's contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) on the issue, the assessee has come up with the present appeal before us. The arguments put-forth by the Ld. A R are summarized as under: - JCB Earth Movers were also registered under the Motor Vehicle Act before the RTO and the relevant documents were produced before the CIT (A) for perusal; - That JCB Earth Mover is an excavator and its main function is removing the soil or earth through which it has been categorized as yet, at the same time, JCB Earth Movers another function is to carry or transport the removed soil and dump it at another site and thus discharging the function like transshipment and loading in to another vehicle; that for the purpose of rates of depreciation, JCB Earth Movers can be treated as a motor lorry and, hence, it is eligible for higher rate of depreciation at 30% - Relies on the case laws: (a) Gaylord Constructions vs. ITO (2008) 175 Tax (Coch) (Mag) (b) Bose Abraham vs. State of Kerala (2001) KTR 366 (SC) - JCB Earth Mover was an excavator and held by the Supreme Court that the excavators and road rollers were motor vehicles for the purpose of registration under Motor Vehicles Act, that they were suitable for use on road ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 also recognizes the term earthmoving machinery and specifies a higher rate of depreciation for such machinery employed in heavy construction works and, thus, earthmoving machines cannot be equated with or classified as motor vehicles and charged to depreciation as applicable to motor vehicles; - the question as to whether earthmoving machinery should be classified as motor vehicle and subjected to higher depreciation needs to be viewed from a broader perspective. 5.3. Also furnished copies of Table of rates at which depreciation is admissible and rates of depreciation under Companies Act. 6. We have carefully considered the rival submissions, meticulously perused the relevant records and also the evidences produced by either party during the course of hearing in the shapes of case laws, table of rates of depreciation admissible etc., 6.1. The assessee has been operating JCB Earth Moving Machines for which it had claimed depreciation at the rate of 30% which was scaled down to 15% by the AO on the ground that the actual depreciation allowable in respect of those machines was only at 15%. It was valiantly put-forth before the CIT (A) that JCB machines fall within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliberating the issue, the Hon'ble Court had reasoned that - "The mobile crane of the assessee which admittedly was registered as a heavy motor vehicle , would clearly fall within the expression "motor lorries" in entry No. IIIE(1A) of the Table in Appendix I under rule 5 of the said rules, since it was used by the assessee in its business of running the crane on hire. Therefore, assessee was entitled to depreciation at the rate of 40 per cent on crane mounted on motor truck. 6.4. With due regards, we would like to point out that the Mobile crane was registered as a heavy motor vehicle which was, therefore, enlisted to claim depreciation at a higher rate whereas in the present case even the JCB Earth Movers have not been registered as a heavy motor vehicles with the Regional Transport Authorities, leave alone the functioning of a JCB machine was only to excavate the soil, quarry etc., which, in any stretch of imagination, can not be equated either with a mobile crane or a motor truck or motor vehicle, as the case may be and, thus, in our considered view, the ruling of the Hon'ble Court cannot be roped in to come to the rescue of the present assessee. 6.5. In the case of Gay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he soil so collected by its front portion will be dumped in a truck which will be parked by its side. The prime functioning of a JCB machine, as we have seen elsewhere, was confined to excavate the soil/earth and not to carry the removed soil and dump it at another place. Such an exercise may be an isolated one [if the removed soil was so negligible in quantity), but, cannot be a regular feature. As already narrated, JCB Machines are designed in such a way to excavate the soil and not to carry the removed soil to transport etc., Hypothetically, if a JCB machine were to be employed to excavate the soil as well as to remove the same to transport to another site, the cost involved in such an exercise would definitely be fantastic than engaging a truck/lorry to remove the heap of soil which, in our considered view, no prudent person would venture to indulge. 6.5.4. Moreover, the present assessee had not produced any tangible documentary evidence either before the authorities below or before this Bench to assert that the JCB machines of the assessee had indulged not only in excavate the soil, but, transported the removed soil to another place as well so as to take sanctuary under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word 'motor vehicle'. Words referred to are motor cars, motor buses, motor lorries, motor taxies, commercial vehicles etc. The rate adopted by the assessee for claiming depreciation on JCB is 30%. The Act prescribes 30% depreciation for motor buses, motor lorries and motor taxies used in a business of running them on hire as provided in (rule 5) - New Appendix-I (effective from A.Y. 2006-07 onwards). Nowhere in the Act or the Rules, JCB is mentioned. Part-III sub-item No.1 of the Table specifies that machinery and plant other than those covered by sub-items (2), (3) and (8) shall be entitled to claim depreciation @ 15%. Since JCB does not fall under sub-item (2), (3) and (8) of Part-III, it has to be necessarily included in sub-item (1) for which the permissible rate of depreciation is 15%. The assessee's contention that JCBs are registered under the Motor Vehicles Act before the RTO, and therefore it has got the characteristics as that of motor buses, motor lorries etc. is not appreciable. Under section 2 of the Motor Vehicles Act, there are distinct definitions for motor car, contract carriage, goods carriage, heavy goods vehicle, heavy passenger motor vehicle, light motor vehicl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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