INCOME TAX ACT, 1961

Section 32(1)

Depreciation - Rate of depreciation - Assessee deriving income from civil contract business claimed depreciation at the rate of 30% on various items under the head 'Plant and machinery' referring them as motor lorries used in a business of running them on hire -

Assessee deriving income from civil contract business claimed depreciation at the rate of 30% on various items (14 Nos.) under the head plant and machinery referring them as motor lorries used in a business of running them on hire. But on perusal of profit and loss AO noticed that, assessee had not shown any income from hiring in respect of 14 items of plant and machinery. AO also noticed that concerned items were not under the category of motor lorries as defined in the Act regarding charging of depreciation as per section 32. Accordingly, AO treated 14 items as plant and machinery eligible for depreciation @ 15%. Held: Only, motor buses, motor lorries and motor taxies used in a business of running of them on hire is eligible for depreciation @ 30%.Assessee in the instant case was engaged in civil construction business and it achieved huge turnover but without using of these heavy/light machineries/vehicles huge turnover could not be achieved. If assessee used the same partly for own use and partly for hire charges it was not entitled to claim excess depreciation as per provisions of the Act. Accordingly, assesse was not entitled to higher depreciation especially when no agreement was made for giving the vehicles on hire.

Supported by:CIT v. Anupchand and Co., (1999) 239 ITR 466 (Madhya Pradesh) : 1999 TaxPub(DT) 1333 (MP-HC).

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2013-14

SUBSCRIBE FOR FULL CONTENT