INCOME TAX ACT, 1961

Section 32

Depreciation - Rate of depreciation - Cranes used in hiring business - Whether assessee was obliged to rise cranes exclusively for hiring purpose and not for any other purpose

Assessee engaged in the business of hiring, operation and maintenance of construction equipments claimed depreciation at the rate of 30% on various types of cranes, viz., Telescopic Cranes, Rail for Tower Cranes and Tower Cranes, etc., AO took the view that hiring out construction equipments was an ancillary activity of assessee and there was every possibility that cranes were used for assessee's own construction business. Accordingly, cranes referred to above did not fall within the ambit of Motor Bus, Motor Lorries and Motor Taxis and, therefore, AO made disallowance by restricting depreciation to 15% on other plant and machinery. Held: There was thumping evidence on record to indicate that assessee was involved in the business of hiring of cranes. It might be using the cranes for its personal construction business too, but that did not disentitle assessee to claim higher depreciation once it was shown that assessee was in the business of hiring the cranes. In fact, it would be an error to take the view that for the purpose of claiming depreciation at the rate of 30% assessee was obliged to establish that cranes were used exclusively for the hiring business and that they were not used for any other purpose.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

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