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TMI Blog2018 (5) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... PER V. DURGA RAO, JUDICIAL MEMBER This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-2, Visakhapatnam, dated 30/03/2017 for the Assessment Year 2013-14. 2. Facts of the case, in brief, are that assessee-company is engaged in the business of stevedoring, filed its return of income by declaring total income of ₹ 2,80,69,916/- . The case of the assessee was selected for scrutiny and assessment was completed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). During the course of assessment proceedings, the Assessing Officer has noted that the assessee has claimed depreciation on the opening WDV and addition at 30% on motor lorries, dumpers and trailers. The Assessing Officer also noted that as per Part-III(3)(ii) of the table of rates prescribed under Rule 5 of the IT Rules, 1962, higher rate of depreciation at 30% is eligible only to motor lorries, motor buses and motor taxies, which would be used for the purpose of running them on hire. Otherwise, they are eligible for depreciation at 15% as per Part-III(1) of the said Rules and denied the claim of the assessee at higher rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Copies of bills were enclosed as part of paper book. The assessee also submitted that the turnover of its business was as under: Customs House Agent 4,11,32,929/- Cargo Handling Services 16,54,97,772/- Port Services 5,95,09,835/- Transport 19,02,83,456/- 34,75,21,824/- 80,39,45,819/- It was pointed out that the major chunk of its revenue was from transport contract; and that if the reimbursements were not reckoned, 41% of its revenue is from transport activity. 6.2 It was further submitted that the lorries/ dumper/ trailers were used for the business of running them on hire and billed for services rendered for transportation of goods and running the vehicles on hire for its customers and that all the vehicles were used for transporting/ running on hire of third parties and not for the business of C F agent. It was also contended that this is not a case where the business of C F agent used the lorries/dumper/trailers for himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depredation. The decision in the case of Bothra Shipping Services was rendered in similar factual matrix and applicable to assessee's case. 7.2 The Hon'ble A.P. High Court in the case of CIT vs. AM Constructions (238 ITR 775) held that tippers are eligible for higher rate of depreciation as the substantial income of the assessee is from hiring of tippers notwithstanding the fact that the assessee used it for its agricultural operations also. The Hon'ble Bombay High Court in the case of CIT vs. SC Thakur and Bros (322 1TR 463) held that where the assessee, a civil contractor was required to transport earth from one place to another and its business receipts included charges for transporting goods to a large extent, the assessee would be entitled to depreciation on trucks/ dumper at a higher rate, in view of the CBIDT Circular No.652 dated 14.06.1993. The Hon'ble High Court held that the circular makes it clear that the higher rate of depreciation is also admissible when the motor lorry is used by the assessee in his own business of transportation of goods on hire. Thus, it is not necessary that the assessee has to be exclusive transportation contractor to claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed all the details of the business receipts. The ld. CIT(A) by considering the details, gave a categorical finding that in the total gross receipts of ₹ 55,75,16,582/-, the assessee has received ₹ 22,99,64,332/- from transport business. Therefore, he is of the opinion that the transportation business is carried out by the assessee by using the vehicles, such as Trailers, Dumpers Motor Lorries is not an incidental to the business of the assessee, as the receipts from the transportation are substantial and directed the Assessing Officer to allow higher rate of depreciation. For the sake of convenience, the relevant portion of the ld. CIT(A)‟s order is extracted as under:- 5.3.1 On the other hand, the AR contended that the transportation is part of the main business of the assessee and, therefore, it is not merely incidental to clearing and forwarding business. It is further submitted that clearing and forwarding agency business does not automatically involve transportation. In fact, it is contended that transportation is part of the main business of the assessee as can be seen from the assessee's name itself i.e Srivalli Shipping and Transport . Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in the business of trading in timber. We do not have the returns filed by the assessee before us. We do not have the constitution of the assessee company before us. There is no evidence to indicate that the assessee was in the business of hiring out motor lorries for running them to earn business income. The entire inference is drawn by CIT(A) only on the footing that the AO had treated ₹ 12,59,639 as part of total business income which is not determinative of the above test viz., whether the trucks were used in the transportation business as claimed by the assessee. For the aforestated reasons, we set aside the impugned judgment of the High Court and we remit the matter to CIT(A) for de novo examination of the case in accordance with law. 5.3.5 In view of the facts narrated above and also in the light of the ratio laid down by the Hon'ble High Court of Andhra Pradesh and the Hon'ble Supreme Court, discussed above, I am of the view that the assessee is eligible for depreciation at higher rate as it is running its vehicles i.e. motor lorries, trailers and dumpers on hire. Accordingly, the AO is directed to allow the depreciation claim of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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