The Income Tax Appellate Tribunal (ITAT), Cuttack bench has held that 30% depreciation is allowable to motor lorries in the business of transportation of goods on hire under the provisions of section 32 of the Income Tax Act, 1961.
During the course of assessment proceedings, the Assessing Officer noticed that in the profit and loss account for the year ended 31.3.2010, the assessee has claimed deduction of Rs.5,27,38,554/- for depreciation as per the Companies Act. He also noticed that depreciation @ 30% was claimed on commercial vehicle. The AO observed that since the assessee’s own business is transportation and the commercial vehicles as per the fixed assets/depreciation schedule are used in the assessee’s business, therefore, depreciation @ 15% is required to be allowed as against 30% claimed by the assessee. In view of above, the Assessing Officer added Rs.35,28,785/- towards excess claim of depreciation to the total income of the assessee.
On appeal, the CIT(A) relied on the CBDT circular and granted relief to the by observing that in Board Circular No.609, dated 29.07.1991 (SI. No. 244) it was clarified that where a tour operator or travel agent uses motor buses or motor taxis owned him in providing transportation services to tourists, higher rate of depreciation would be allowed on such vehicles. It is further clarified that higher depreciation will also be admissible on motor lorries used in the assessee’s business of transportation of goods on hire. It was held that the higher rate of depreciation, however, will not apply if the motor buses, motor lorries, etc.. are used in some other non-hiring business of the assessee.
Mr. Arun Khodpia (AM) and Mr. Chandra Mohan Garg (JM) has observed that the “Ld DR could not controvert the findings of fact that as per circular No.652 dated 14.6.1993, the motor lorries used in assessee’s business of transportation of goods on hire is eligible for higher depreciation @ 30%. In view of above, we see no reason to interfere with the order of the ld CIT(A), which is hereby confirmed and the ground of appeal of revenue is rejected.”
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