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Earth Moving Machines (like JCB) treated as Asset or Vehicle, Accounting - Auditing

Issue Id: - 109879
Dated: 15-2-2016
By:- Mathurthi RamKumar

Earth Moving Machines (like JCB) treated as Asset or Vehicle


  • Contents

Dear All,

Greeting of the day..Kindly clarify my doubt..earth moving machine - JCB treated as vehicle or asset in a manufacturing unit.

Regards

M.RamKumar

Posts / Replies

Showing Replies 1 to 8 of 8 Records

Page: 1


1 Dated: 15-2-2016
By:- Mahir S

Sir,

You have not elaborated nor specified the reason of your query.

However, the functioning and operation of a JCB machine cannot be equated either with a motor lorry or a motor truck.

The JCB machine invariably falls within the scope of a particular type of machinery for the sole purpose of excavation of soil/earth which comes under the purview of 'Plant and Machinery' (Assets) and so the applicable rate of depreciation in respect of JCB machines shall accordingly be based on its being 'Plant and Machinery' (Assets) and not based on it being as a Vehicle; as seems to be your indirect query.

In view of above, you are therefore eligible to claim lesser amount of depreciation under the category of Assets rather than under Vehicles.


2 Dated: 15-2-2016
By:- Mathurthi RamKumar

Dear Sir,

Thank you for quick reply. I am working in a power plant and we also have Kraft paper manufacturing unit. We are using a JCB in for both plants. like lifting of raw material and coal etc...

Hope my doubt is clear.

Regards

M.RamKumar


3 Dated: 15-2-2016
By:- Mahir S

Sir,

The definition of `motor vehicle' from the Motor Vehicles Act, 1988 (MV Act) as per the MV Act is as follows:

"Motor vehicle or vehicle means any mechanically propelled vehicle adapted for use upon roads...; but does not include ... .a vehicle of a special type adapted for use only in a factory or in any other enclosed premises... "

Further, Earth moving machinery is primarily used in the infrastructure sector. It is also a fact that the JCB Earth Movers are not been registered as heavy motor vehicles (like Mobile Cranes) with the Regional Transport Authorities.

.T he Income-Tax Act also had made a distinction between earth moving machinery and motor vehicles.

Hence, the fact that in your case that JCB is also being used for lifting of raw material and coal etc. shall not changed its identity.

Therefore, there is no change in the views expressed in my above reply, as the legal position on the issue is already settled.


4 Dated: 16-2-2016
By:- MARIAPPAN GOVINDARAJAN

In my view also JCB will not come under the definition of ''vehicle' and therefore it is to be considered as Plant and Machinery.


5 Dated: 16-2-2016
By:- KASTURI SETHI

I am thankful to both experts, Sh.Mahir S and SH. MARIAPPAN GOVINDARAJAN, Sir. Really your views have enriched my knowledge.Concept is clear to me know.


6 Dated: 16-2-2016
By:- YAGAY AND SUN

Dear Mathurthi Ramkumar

You may find this judgment useful

2010 (12) TMI 913 - ITAT, Bangalore Magtron Earth Movers Versus ITO


7 Dated: 16-2-2016
By:- Mahir S

Thanks M.Govindarajanji and K. Sethiji for the endorsement and appreciation of my views.


8 Dated: 17-2-2016
By:- KASTURI SETHI

Thanks to M/S.YAGAY AND SUN for providing case law in support of the contention of the experts. It is really useful.


Page: 1

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