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TMI Blog2012 (4) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... in law in setting aside the order under section 154 of the Income Tax Act, 1961 passed by the AO and upheld by the CIT(A), wherein the mistake in the application of rate of depreciation on Trucks was rectified? (ii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was justified in law in holding that the order in question rectifying the mistake in application of rate of depreciation on assessee's own trucks used by the assessee for its own business tantamounts to review of the assessment order?" 3. The respondent-assessee filed its return of income for the assessment year 1992-93 on 29.3.1994 declaring net income of Rs. 51,290/-. The assessment was framed by the Assessing officer under section 143(3) of the Act on 23.2.1995, Annexure A-1 at a total income of Rs. 1,97,217/-. It was noticed by the Assessing Officer that as per Appendix I to Rule 5 of the Income Tax Rules, 1962 (for brevity, "the Rules"), the rate of depreciation applicable on the trucks not plied on hire was 25% and not 40% as claimed and allowed in the assessment order. Accordingly, the Assessing officer rectified the assessment by invoking the provisions of Section 154 of the Act and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in CIT v. Sardar Stones [1995] 215 ITR 350 in support of his submissions. 7. Controverting the aforesaid submissions, learned counsel for the assessee submitted that the assessment was framed under Section 143(3) of the Act and recourse to rectification under Section 154 of the Act was in the nature of review which was not permissible. On the strength of judgments in Jaipur Udyog Ltd. v. ITO [1985] 156 ITR 377/[1983] 14 Taxman 471 (Raj.), Harbans Lal Malhotra & Sons (P.) Ltd. v. ITO [1972] 83 ITR 848 (Cal.), T.S. Balaram, ITO v. Volkart Bro., [1971] 82 ITR 50 (S.C.), it was contended that the rectification order passed by the Assessing Officer under Section 154 of the Act was beyond jurisdiction as there was no mistake apparent on the record. Reliance was placed on Circular No.652 dated 14.6.1993 to urge that the Board itself had clarified with regard to the rate of depreciation on motor buses, motor lorries and motor taxis used in the business of transportation of goods. According to him, under the aforesaid circumstances, in view of judgment of Bombay High Court in CIT v. S.C. Thakur & Bro. [2010] 322 ITR 463/[2009] 180 Taxman 348, the higher depreciation will be admissible on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and motor taxis are used for public carrier, rate of depreciation admissible is 40%. However, in the case of private carrier, the same is restricted to 25%. 11. In order to appreciate the controversy in right perspective, it would be essential to refer to discussion made by Assessing Officer in the original assessment order framed under Section 143(3) of the Act, which reads thus:- "The details of depreciation claim reveal that the assessee has claimed depreciation on trucks @ 40% as admissible in the case of Public Carrier Trucks. The assessee was asked to explain as to why it should not be restricted to 25% because the trucks were used by the assessee for its own business. The assessee submitted its detailed explanation in support of its claim vide para 13 of the written reply filed on 19.12.94, which is reproduced as under:- "In regard to the depreciation on trucks, it is submitted that our trucks are public carriers, not private carriers. We use our trucks for the carriage of crashers, Bajris and sands and other goods meant for use in the execution of construction work of the assessee firm. These trucks of the firm carried these materials during the year 1991-92 nearly fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the materials like crasher, bajri and other goods from the market to the site of the assessee's business is double if these materials are brought in trucks taken from the truck unions. In this way the assessee is able to save huge amount of hire charges which are like carriage charges earned by Public Carrier Trucks. Further if the goods are purchased from the local market the cost is higher. Keeping in view these facts and other points as reproduced above the claim of depreciation appears to be in order. Hence depreciation as claimed is allowed to the assessee." 12. Learned counsel for the assessee was unable to demonstrate with reference to any material that the respondent-assessee was using the vehicles in a business of transportation of goods and the trucks owned by the respondent-assessee were being used for public carrier. Further, he was unable to substantiate that the assessing officer while framing assessment under section 143(3) of the Act had recorded any finding that the respondent-assessee was using the vehicles in a business of running them on hire and the trucks on which depreciation had been claimed @ 40% were being used for public carrier. In such a situation, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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