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Depreciation @ 30% on hire basis applicability, Income Tax

Issue Id: - 117103
Dated: 18-3-2021
By:- Kush Lodha
Depreciation @ 30% on hire basis applicability

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Sir,

We have bought a poclain or excavator (no wheels but chain mounted) and give them to a factory owner on hourly rate basis although driver and repair & maintenance expenses to be borne by us but diesel to be provided by them. We do not have any other control on the machine. I would like to know whether it will tantamount to provide them on hire although driver and helper is on our own accord. (TDS deducted u/s. 194(I)(a) @ 2% by the factory owner).(Also SAC Code - 9973 is used for invoicing).

Secondly, if say it is on hire, can i take depreciation @ 30% every year under section 32 of Income Tax Act. In Sec. 32 it says about motor cars, motor lorries or motor taxis used in the business of running them on hire @ 30%, does excavator or poclain will be covered in the above?

Or Sec. 32 talks about additional depreciation @ 30% in the first year of purchase. Am i entitled to take 30% depreciation in the first year only and then @ 15% normal rates from the next year.

Thanks & Regards.

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