INCOME TAX ACT, 1961

Section 32

Depreciation - Assessee claimed depreciation @ 50% on tankers - AO restricted claim of depreciation @ 30% -

During the course of assessment proceedings, AO noticed that assessee had claimed depreciation @ 50% on heavy goods vehicle as against allowable depreciation @ 30%. On query, assessee explained that claim of 50% depreciation on vehicle was pertained to trucks which were originally purchased in assessment years 2009-10 and 2010-2011. Assessee had further submitted that in order to keep vehicle purchased in proper condition it had incurred expenses for renovation of drivers cabin, etc. Therefore, the said amount was capitalized and depreciation was claimed at 50% as it is in the same block of asset. AO had not agreed with the submission of assessee and restricted the claim of depreciation @ 30% and disallowed excess claim of depreciation. Held: Commercial vehicles were purchased by the assessee during financial years 2008-09 and 2009-10 which were eligible to special rate of depreciation @ 50%. No new vehicle was purchased by the assessee during the year. It is observed that no depreciation can be claimed for individual assets under Income Tax Act because of concept of block of assets. Depreciation in the case of the assessee was eligible as per the block of asset otherwise if such expenditure were put in category of repair/revenue expenditure then the full claim of such expenditure was to be allowed. Since AO treated such expenditure as capital expenditure, therefore, no new asset was created on renovation of the commercial vehicle and claim of the assessee for depreciation @ 50% applicable to the particular block of assets was justified.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2013-14

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