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TMI Blog2023 (12) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 30% on crawler cranes amounting to Rs. 1,32,63,680/- instead of eligible depreciation @ 15%, as the cranes are do not fall under the category of Heavy Motor Vehicles. 3. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the claim of the higher depreciation of the assessee ignoring the fact that it is nowhere provided in the Income Tax Act as well as in the Income Tax Rules that the cranes are motor vehicles and these are eligible for the higher depreciation. 4. On the basis of the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. 5. It is therefore prayed that the order of the Ld. CIT(A) may kindly be set aside that of the Assessing Officer be restored. 6. The assessee craves leave to add, alter, amend and/or withdraw any grounds of appeal either before or during the course of hearing of the appeal." 3. Succinctly, the factual panorama of the case is that assessee before us is a Private Limited Company. The assessee-company is engaged in the business of material handling and erection of heavy equipment on contract basis and providing equipment on hire durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer rejected the claim of the assessee and stated that the assessee was eligible for depreciation @15% and not @30% on these cranes. Therefore, Assessing Officer disallowed the excess depreciation claimed by the assessee on above two cranes i.e. Rs. 1,32,63,580/- and made the addition. 5. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before NFAC/Ld. CIT(A), who has deleted the addition. The ld CIT(A) noted that the basic question here is whether the cranes are to be considered as 'Motor lorries' and be allowed depreciation @ 30% or be treated as machinery and allowed depreciation @ 15%. This question was clearly answered by jurisdictional HIGH COURT OF GUJARAT in the case of Prasad Multi Services (P.) Ltd Vs. Deputy Commissioner of Income Tax, [2020] 122 taxmann.com 73 (Gujarat), wherein it was held as under: "Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of (Higher depreciation) - Assessment year 2011-12 - Assessee-company was engaged in business of hiring, operation and maintenance of construction equipments - It claimed depreciation at rate of 30 per cent on various types of cranes- Whether RTO regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r truck, used in business of running on hire, and registered as on heavy motor vehicle, would fall within expression "motor lorries" and hence, the assessee is entitled to claim depreciation at a higher rate. 9. After giving our thoughtful consideration to the submission of the parties and perusing the judicial decisions relied upon by the Ld. Counsel, we find that the issue involved in the present appeal is no longer res integra. The question as to whether where assessee was in business of hiring out cranes, even if, such cranes were also used for personal construction business, same would not disentitle assessee to claim higher depreciation, that is, the assessee is entitled to claim higher depreciation, and the issue was considered by various judicial forums across India. The Hon'ble jurisdictional High Court of Gujarat in the case of Prasad Multi Services (P.) Ltd. vs. DCIT [2020] 122 taxmann.com 73 (Guj)/[2020] 423 ITR 542 (Guj)[16-07-2019], held as follows: "24. It is not in dispute that similar issued had cropped up in the Assessment Year 2007- 08, and after due consideration of all the relevant aspects of the matter, the Assessing Officer had granted depreciation at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iterating that principle. Thirdly, the same principle - namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken." These observation were made in a case where taxation was in issue. 15. This Court in Parashuram Pottery Works Co. Ltd. v. ITO (106 ITR 1 at p.10 : 1977 SC 429 at p.435) stated : "At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity." Assessments are certainly quasi-judicial and these observations equally apply. 16. We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less there is some material change in the facts. In the case of Allied Finance (P.) Ltd. (supra), the Tribunal had decided an issue in favour of the assessee by two orders and those two orders were followed by the Tribunal in the subsequent appeals. The department had accepted the correctness of the basic two orders and did not file any appeal against them. It, however, challenged the subsequent orders of the Tribunal, and while refusing to entertain the appeal, the Delhi High Court held that there was no reason to discard the principle of consistency which requires that when the revenue has accepted a particular view by not filing an appeal that view should be adhered to, unless there is a just cause for departure. The High Court deprecated the practice of pick and choose. 28. The basis of the rule of consistency seems to us, with respect, to be the classic observations of His Lordship Justice H.R. Khanna speaking for the Supreme Court in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC). It was held that : "We have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it was said (page 328 of 193 ITR) : "Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be proper apprehension by the Court of the legal result either of the construction of the document or the weight of certain circumstances. If this were permitted litigation would have no end, except when legal ingenuity is exhausted. It is a principal of law that this cannot be permitted, and there is abundant authority reiterating that principle. Thirdly, the same principle - namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken." 30. Reference was also made to Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC) and then it was held (page 329 of 193 ITR) : "We are aware of the fact that strictly speaking res judicata does not apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endent of the principle of consistency, the assessee has a good case on merits. 34. We fail to understand as to on what basis the Revenue authorities have come to the conclusion that the assessee is not in the business of hiring and that the main business of the assessee is construction. According to the Revenue authorities, the cranes are used by the assessee for his own business of construction. There is thumping documentary evidence on record to indicate that the assessee is very much in the business of hiring. The depreciation at the higher rate could not have been declined merely on the assumption that the cranes might have been used by the assessee for his own business of construction. In fact, it would be an error to take the view that for the purpose of claiming depreciation at the rate of 30% the assessee is obliged to establish that the cranes are used exclusively for the hiring business and that they are not used for any other purpose. 35. We may refer to a decision of this Court in the case of Gujco Carriers (supra), on which the assessee has placed strong reliance. The issue before this Court in Gujco Carriers (supra) was that the assessee had purchased a mobile cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified with the rates at which depreciation is to be allowed as are mentioned against them. The assessee claimed depreciation at 40% on its crane under Item III E(1A) of Appendix 1, which reads as follows : "E. (1A) Motor buses, motor lorries and motor taxis used in a business running them on hire." In the alternative, the assessee claimed depreciation before the Tribunal on the basis of the C.B.D.T. Instruction No. 617 dated 13-9-1973, which has been reproduced in the order of the Tribunal, as under: "132. Fork lift trucks - Rate of depreciation prescribed in Part 1 of Appendix 1 to Incometax rules. Fork lift trucks would be classified under item III (ii) -D(9) of Appendix I to the Income-tax Rules, 1962 and would be entitled to depreciation at the rate of 30 per cent." Item III (ii) - D(9) which is referred to in the aforesaid Instruction No. 617 which relates to fork lift trucks, reads as under : "Motor buses and motor lorries other than those used in a business of running them on hire." In the year 1973, the entry D(9) read as under : "Motor buses, motor lorries, motor taxis, motor tractors" The origin of word 'lorry' is uncertain. 'Lorry' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings for bundled or coiled material. Industrial trucks which would also come within the expression 'motor lorries' are described as follows in the Encyclopedia Britannica : "Industrial truck carrier designed to transport materials within a factory area with maximum flexibility in making moves. Most industrial trucks permit mechanized pickup and deposit of the loads, eliminating manual work in lifting as well as transporting. Depending on their means of locomotion, industrial trucks may be classified as hand trucks or power trucks. Hand trucks with two wheels permit most of the load to be carried on the wheels, but some of the load must be assumed by the operator to balance the truck during movement. Common two-wheel hand trucks include the barrel, box, drum, hopper, refrigerator, paper-roll, and tote-box trucks. Four-wheel hand trucks are found in many more varieties, including dollies, high and low-bed flat trucks, carts, rack carriers, wagons, and various hand-lift trucks having mechanical or hydraulic lifting mechanisms for raising and lowering a load. Power trucks are propelled by batteries and an electric-motor or by an internal - combustion engine with either a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors from crawler cranes and truck parts, the truck crane for years been manufactured and sold as a unit. Although the truck crane is difficult to move on soft or slippery ground, it is highly mobile on a firm footing and is easily moved over roads and highways. (See "Crane Hoist" - McGraw Hill - 'Encyclopedia of Science and Technology'). A crane is usually typed according to its undercarriage. Some of the cranes which undercarriage is not a truck are, 'crawler cranes' mounted on continuous tracks, the 'rail or locomotive crane' on special chasis with flanged wheels for use on railway tracks and 'floating crane' on a barge or scow. Therefore, search for the item 'cranes' in the Entries in Appendix 1 without keeping in mind the nature of equipment, was based on an erroneous premise. A crane mounted on a truck is a truck crane which is a well known machinery which can easily move over roads and highways and is not a stationary equipment. Truck crane is described under the heading 'crane' in Encyclopaedia Britannica, as under : "A commonly used type of small movable crane is the truck crane, which is a crane mounted on a heavy, mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nery, is an over-simplification of the matter. The approach of the Tribunal that the plea taken by the assessee that crane was an integral part of the motor vehicle on which it is mounted required ascertainment of facts and fresh investigation, amounts to imposing a burden on a person to prove something of which Court or Tribunal can take judicial notice. For example, if a witness deposes that he had seen a horse, the Court need not insist upon him for a proof of the anatomy of a horse and can take a judicial notice of horse as an animal. The Courts and Tribunals are not required to act dumb or ignorant of the facts of which judicial notice can be taken. Thus, just as a court can presume what a horse is, it can as well know what a crane is, and also that crane is an integral part of a truck-crane which is registered as a heavy motor vehicle. Lack of effort and knowledge sufficient for taking such judicial notice should not be a burden on the citizens in judicial proceedings. As provided by section 56 of the Evidence Act, no fact of which the Court will take judicial notice, need be proved. This equally applies to the Tribunals which are not in fact strictly bound by the rules of ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee was entitled to depreciation. On a reference, this Court (at page 1058) held: "What is relevant for the purposes of the present case is that during the period of the lease, the assessee was held to be the owner of the building. The Tribunal, in our view, was justified in holding that the assessee was the owner of the building, fixtures and fittings of Alpana Talkies within the meaning of section 32 of the Income-tax Act. Consequently, the assessee would be entitled to depreciation under section 32 of the Income-tax Act, 1961, on the above items." 5. The expression "owned by the assessee" also came up for interpretation before the Allahabad High Court in Addl. CIT v. U.P. State Agro Industrial Corpn. Ltd. [1981] 127 ITR 97. In this case, depreciation was claimed by the U.P. State Agro Industrial Corporation Ltd., in respect of a building which stood in the name of the State of U.P. The claim was sought to be rejected on the ground that no sale deed had been executed by the State Government in favour of the assessee. The contention of the assessee was that even though the U.P. Government had not transferred the immovable property by a registered deed, the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Calcutta High Court in CIT v. Salkia Transport Associates [1983] 143 ITR 39. The dispute in this case was somewhat similar to the dispute in the case before us. Here also depreciation was claimed by the assessee in respect of motor vehicles claimed to be owned by it though not registered under the Motor Vehicles Act in its name. The Calcutta High Court held that the provisions of the Motor Vehicles Act, 1939, do not prevent a person from becoming the owner of the motor vehicles without registration. Registration is not an essential prerequisite for the acquisition of ownership of the motor vehicle but is an obligation cast upon an owner of the vehicle for the purpose of running the vehicles in any public place. Hence, it was immaterial whether the buses were registered in the assessee's name or the original owner's name. On the facts of the case, it was held that the assessee was the owner of the vehicles though the same were not registered in its name under the Motor Vehicles Act and that it was entitled to depreciation in respect thereof. 9. To the same effect is the decision of the Kerala High Court in the case of CIT v. Nidish Transport Corporation [1990] 185 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent an application in this behalf by registered post acknowledgement due to the registering authority referred to in section 29A, together with a declaration that he has not received any communication from such authority refusing to grant such certificate or requiring him to comply with any direction subject to which such certificate may be granted; (b) the transferee shall, within thirty days of the transfer, report the transfer to the registering authority within whose jurisdiction he resides, and shall forward the certificate of registration to that registering authority together with the prescribed fee and a copy of the report received by him from the transferor in order that particulars of the transfer of ownership may be entered in the certificate of registration." 11. From a plain reading of this section, it is clear that this section does not deal with transfer of the ownership of any motor vehicle nor does it impose any restriction on transfer of such ownership. It simply obligates the transferor and the transferee to report within the specified time from the date of transfer the fact of transfer to the registering authority. This section, in fact, presupposes trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r an owner of a motor vehicle to get the vehicle registered and to display the certificate of registration before the vehicle is driven in any public place. Registration is not an essential pre-requisite for acquisition of owner ship of a motor vehicle but is an obligation cast upon the owner of a vehicle for the purpose of running of the vehicle in any public place. Therefore, in our opinion, whether the buses were registered in the assessee's name or not is not very material for the purpose of this case. This may be a factor that has to be taken into consideration. But when under the agreement the new buses that were acquired by the assessee in replacement of the old buses became the property of the assessee- firm, there is no reason to hold that the asses see was not the owner of the buses because the buses were not registered in the name of the assessee. 16. Section 22(1) of the Motor Vehicles Act does not lay down that a person cannot be the owner of a motor vehicle unless the motor vehicle is registered in his name. 17. The Supreme Court had also occasion to consider this question in the case of K.L. Johar & Co. v. Deputy Commercial Tax Officer [1965] 16 STC 213 and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of hiring the vehicle on rent, then he is not entitled to claim higher depreciation under clause (2)(ii) of Entry-III of Appendix-I. There need not be any debate on the proposition of law as explained by this Court in the said judgment. However, as discussed above, there is thumping evidence on record to indicate that the assessee is involved in the business of hiring the cranes. He might be using the cranes for his personal construction business too, but that does not disentitle him to claim higher depreciation once it is shown that the assessee is in the business of hiring the cranes. 41. In the overall view of the matter, we have reached to the conclusion that the Tribunal committed an error in dismissing the appeal. 42. In the result, this Appeal succeeds and is hereby allowed. The impugned order passed by the Income-tax Appellate Tribunal in the Prasad Multi Services (P.) Ltd. (supra) for the Assessment Year 2011-12 is hereby quashed and set-aside. The substantial question of law is answered in favour of the assessee and against the Revenue." 10. On identical facts, the Hon'ble jurisdictional High Court of Gujarat in the case of Gujco Carriers vs. CIT [2002] 122 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame from the wagon business. Because of their speed and flexibility, trucks have come to carry a quarter of the intercity freight in the United States, and they enjoy an almost total monopoly in intracity freight delivery. In 1896 Gottlieb Daimler of Germany built the first motor truck. It was equipped with a four-horsepower engine and a belt drive with two speeds forward and one in reverse. In 1898 the Winton Company of the United States produced a gasoline-powered delivery wagon with a single-cylinder six-horsepower engine. In World War I motor trucks were widely used, and in World War II they largely replaced horse-drawn equipment. A notable vehicle was the four-wheel-derive, quarterton- capacity, short-wheelbase jeep, capable of performing a variety of military tasks." 12.2 Lorry or truck would, therefore, mean not only any motor vehicle designed to carry freight or goods but also to perform special services like fire fighting. Fire engine also called fire truck is a self-propelled mobile piece of equipment used in fire fighting. There can be other special services to be performed by motor vehicles designed for such services. Thus, a lorry, i.e., truck adapted or designed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wheels; the operator rides above the inverted U-frame, within which the load - lumber, bar steel, or pipe is carried on elevating bolsters. Other common types include high and low lift platform trucks, motorized pedestrian led, side-clamp, tractor, and side-loading trucks." [Emphasis supplied] 12.3 It will, thus, be clear that motor vehicles like fire trucks, fork-lift trucks and crane trucks which are designed for special services, fall within the category of 'motor trucks' (also called 'motor lorries'). 13. The word 'crane' when used for an inanimate object means a machine for moving heavy objects usually by suspending them from a projecting arm or beam. Crane is any of a diverse group of machines that not only lift heavy objects but also shift them horizontally. Movable cranes are mounted on railway cars, motor trucks or chassis equipped with caterpillar treads and the hoisting machinery is mounted so as to counterpoise part of the load on the boom and thereby preventing the entire crane from overturning while carrying the load. The fork-lift truck widely used for moving goods between warehouse storages and shipping vehicles, "is a highly maneuverable crane adaptable to han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed when used for the carriage of goods. This definition is not confined only to carriage of freight which is narrower than the expression 'carriage of goods'. In the instant case, truck is adapted for use solely for carriage of the crane mounted on it. The mounted crane is attached to the truck which carries it. The test of carrying goods such as potatoes and tomatoes that requires loading and unloading in context of carriage of freight when transported, as was suggested on behalf of the revenue, will not be decisive. Unloading, in the context of truck crane where the crane remains mounted and attached to the truck when carried and even at the destination where it is put to use is not a relevant factor at all. Though not required to be loaded or unloaded like other goods transported in carriage of freight, the crane remains fixed, mounted on the truck which has been adapted for use solely for its carriage and such truck crane is used for special service of lifting and moving heavy objects. This is why such mobile crane is registered as a heavy motor vehicle which is a heavy goods vehicle as defined in section 2(16) of the Motor Vehicles Act. 15. The approach of the Tribunal and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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