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2006 (10) TMI 262 - ITAT MUMBAIDepreciation on a higher rate - applicable to motor car acquired - commercial vehicle - HELD THAT:- As per the IIIrd proviso to section 32 of the Act, in respect of the asset being commercial vehicle acquired between 2-10-1998 and 31-3-1999, the depreciation has to be allowed on such percentage on the written down value thereof as may be prescribed. However, for our purpose the material provision is that the actual cost of the asset so acquired would fall within that block in the year of acquisition and thereafter the W.D.V., i.e., the actual cost less depreciation allowed thereon would be material for computing depreciation in subsequent years. Thus the cost of car is to be treated as W.D.V. for computing depreciation thereon at the specified percentage. If the provisions of Explanation to this proviso and the definition of maxi-cab and motor cab as given in Motor Vehicles Act, 1988 are read together then motor vehicles used for hire or reward would not be covered under this proviso to section 32 of the Act, and such motor vehicles would be covered under entry (2)(ii) of Item-3 of Part-A of Appendix-I to rule 5 of the Rules. This conclusion further leads to an interference that the Legislature has given benefit of higher depreciation to the assessees not engaged in the business of Motor Buses, Motor Lorries and Motor Taxies on hire and defining such light motor vehicles as commercial vehicles though intentionally excluding vehicles commercially exploited for yielding income from the definition of commercial vehicle further supports the case of the assessee. Therefore, nomenclature of commercial vehicle should not be so construed to deprive the assessee of higher depreciation when all the conditions specified in the Act and the Rules have been met by the assessee. We also hold that, till such car is used by the assessee for its business purpose the assessee would get the depreciation at the rate of 40 per cent as per the IIIrd proviso to section 32 of the Act. Thus, Ground Nos. 1 to 3 of the assessee stand accepted. In the result, the appeal filed by the assessee stand partly allowed.
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