TMI Blog2012 (5) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... to carry on the construction work - Decided in favor of the assessee - IT APPEAL NOS. 380 & 381 OF 2011 - - - Dated:- 21-2-2012 - M.M. KUMAR AND ALOK SINGH, JJ. Rajesh Katoch for the Appellant. JUDGMENT M.M. Kumar, J. This order shall dispose of ITA Nos. 380 and 381 of 2011 filed by the revenue under Section 260A of the Income Tax Act, 1961 (for brevity 'the Act'), challenging order dated 30.06.2011 passed by the Income Tax Appellate Tribunal Chandigarh Bench 'B', Chandigarh (for brevity 'the Tribunal') in respect of the assessment years 2006-07 and 2007-08. The revenue has raised the issue that the depreciation at the rate of 40% on Tippers, Vibrator and Vibrator Soil Compactor is impermissible and the Tribunal has erroneously treated those vehicles as commercial vehicles. According to revenue, these vehicles are qualified for depreciation at the rate of 15% and must be treated as original plant and machinery. 2. Facts are being taken as disclosed in the assessment order. The assessee-respondent filed return declaring an income of ₹ 6,42,330 on 31.10.2007. The return was processed under Section 143(1) of the Act and subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or grant of 30% depreciation and also on the ground that higher depreciation is on account of rigorous and hard use of commercial vehicles in comparison to the stationed and permanently installed machinery. In support of the aforesaid rationale, it has also been held that the vehicles have been registered with the DOT, which is an authority responsible for registration of commercial vehicle. These vehicles are moving vehicles, which are used to move earth and have to be treated at par with the commercial vehicles such as Trucks. It was further held that these vehicles are special purpose vehicles and would not change the characteristics of the assets. Tippers are trucks with the hydraulic attachment for the unloading of earth. Likewise, the vibrators have the additional functions but basic character of the vehicles necessarily remained the same. Therefore, they cannot be treated as plant and machinery. 6. The Tribunal accepted the aforesaid view of the CIT(A) and the view of the Tribunal is discernible from paras 7, 8 and 9, which reads as under: 7. We have heard both the parties and carefully considered their submissions including the authorities referred to by them. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not include the tippers, Vibrator and Vibrator Soil Compactor. Therefore, he has requested for interpretation, which would include these vehicles in the plant and machinery assessable to tax at the rate of 40%. 9. In order to appreciate submission made by learned counsel, it would be appropriate to first notice the provisions of Section 32(1)(ii) of the Act, which reads as under: 32.(1) [In respect of depreciation of- ( i ) buildings, machinery, plant or furniture, being tangible assets. ( ii )** ** ** ( ii ) [in the case of any block of assets, such percentage on the written down value thereof as may be prescribed [Provided that no deduction shall be allowed under this clause in respect of- ( a ) any motor car manufactured outside India, where such motor car is acquired by the assessee after the 28th day of February, 1975 [but before the 1st day of April, 2001], unless it is used- ( i ) in a business of running it on hire for tourists ; or ( ii ) outside India in his business or profession in another country ; and ( b ) any machinery or plant if the actual cost th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Vibrator and Vibrator Soil Compactor would be covered by the expression 'commercial vehicle' or such vehicles have to be regarded as plant and machinery to attract less percentage of depreciation. The reasoning adopted by the Tribunal would not suffer from any legal infirmity because the Tippers are registered under the Motor Vehicles Act, 1988 (for brevity 'the 1988 Act') as road transport vehicle as would be vibrator and vibrator soil compactor. Insofar as Tippers are concerned, a Division Bench of the Karnataka High Court in the case of CIT v. Mahalinga Setty Co. [1992] 195 ITR 526/62 Taxman 554 (Kar.) has opined against the revenue by giving the benefit of investment allowance to the assessee. If that be so then Vibrator and the Vibrator Soil Compactor would follow the suit because the reasoning adopted is that the vehicles are registered under the 1998 Act and it is essential machinery to carry on the construction work. The view of the Karnataka High Court is discernible from following para of the judgment which reads as under: 3. The second questions pertains to the dumpers and tippers belonging to the assessee. The assessee used them to lift earth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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