2002 (2) TMI 48 - HC - Income Tax

Summary

Issues Involved:
1. Entitlement to depreciation at 40% or 30% on a crane mounted on a motor truck.
2. Classification of the crane as a motor lorry under the Income-tax Rules.
3. Applicability of higher depreciation rates based on the nature of the vehicle and its use.

Summary:

1. Entitlement to Depreciation at 40% or 30% on Crane Mounted on Motor Truck:
The assessee claimed depreciation at 40% on a mobile crane purchased for Rs.10,87,248, arguing it was used in the business of running it on hire, thus falling under entry No. IIIE(1A) of Part I of Appendix I to the Income-tax Rules, 1962. The Income-tax Officer allowed only 10% depreciation, stating "crane is not included therein." The Commissioner of Income-tax (Appeals) and the Tribunal upheld this decision, noting the absence of "crane" in the relevant entries.

2. Classification of the Crane as a Motor Lorry under the Income-tax Rules:
The Tribunal rejected the assessee's argument that the crane was an integral part of a motor lorry, requiring fresh investigation. The Tribunal also dismissed the claim for 30% depreciation under the Central Board of Direct Taxes (CBDT) instructions for fork lift trucks, stating the crane was not similar to a fork lift truck.

3. Applicability of Higher Depreciation Rates Based on the Nature of the Vehicle and Its Use:
The court examined whether a mobile crane registered as a heavy motor vehicle could be classified as a "motor lorry" under entry No. IIIE(1A). The court noted that "lorry" means a large motor vehicle for transporting goods or performing special services, including fire trucks and crane trucks. The court concluded that a truck adapted to carry a crane for special services falls within the category of "motor trucks" (also called "motor lorries").

Judgment:
The court held that the mobile crane, registered as a heavy motor vehicle and used for hire, falls within the expression "motor lorries" in entry No. IIIE(1A) of Appendix I. Therefore, the assessee is entitled to depreciation at the rate of 40%. The Tribunal's decision was overturned, and the question was answered in favor of the assessee and against the Revenue. The reference was disposed of with no order as to costs.