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TMI Blog2014 (7) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... ors to supply clay to the assessee. Therefore, the Assessing Officer disallowed the higher rate of depreciation at 30 per cent. which is applicable to lorries plying on hire and limited the depreciation at 15 per cent. as applicable to lorries not used in the business of hiring. On appeal, the Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer. Aggrieved, the assessee has filed this appeal before us. 4. We have heard both parties and perused the material available on record. The learned authorised representative placed reliance on the following judgments : 1. CIT v. Dr. K. R. Jayachandran [1995] 212 ITR 637 (Ker). 2. CIT v. Madan and Co. [2002] 254 ITR 445 (Mad). 3. Deputy CIT v. B. P. Agarwalla and Sons Ltd. [2004] 266 ITR (AT) 77 (Cal). He further submitted that the assessee has been duly authorised by its object clause in memorandum of association to carry on with the business of giving vehicles on hire. The learned authorised representative also submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hire and hence, not entitled for a higher rate of depreciation. For the sake of convenience, we extract below the relevant observations made by the learned Commissioner of Income-tax (Appeals) : "7. I have carefully, gone through the assessment order, the grounds of appeal and submissions filed by the appellant and also the case law relied upon by the authorised representative for seeking relief on the issue. After a careful consideration of the same, my views on the matter with reasons thereof are as given in subsequent paragraphs. 8. During the course of appellate proceedings, the assessee has filed copies of a few work orders issued by the railways where the nature of work has been mentioned as "collection and supply of approved quality machine crushed track ballast as per latest revised specification from outside the railway limit and stacking for measurements at ballast depot in Wadakancheri station yard with all lead and lifts, loading and unloading, conveyance from the place of availability, crossing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered as run on hire. 9. The assessee has placed reliance in the case of CIT v. Stanes Tyre and Rubber Products Ltd. [2000] 242 ITR 619 (Mad). We have gone through the said decision and notice that the facts prevailing in that case was not found discussed by the hon'ble Madras High Court. The hon'ble Madras High Court appear to have mainly decided that the vans and three wheelers used as goods vehicles are entitled to higher depreciation if they are used for hire or reward. Hence, in our view, the assessee cannot derive support from the said decision. In the case of CIT v. Gupta Global Exim P. Ltd. [2008] 305 ITR 132 (SC), the hon'ble Supreme Court in clear terms has observed as under (page 135 of 305 ITR) : 'Under item 2(ii) of heading III, the higher rate of depreciation is admissible on motor trucks used in a business of running them on hire. Therefore, the user of the same in the business of the assessee of transportation is the test. . . In our view, the entire approach of the Commissioner of Income tax (Appeals) was erroneo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on hire. 11. We notice that a similar view has been expressed by the hon'ble Madhya Pradesh High Court in the case of Kailash Chand Bagaria v. CIT [2001] 249 ITR 720 (MP). In the said case, the assessee therein was engaged in the business of manufacture and trading in limestone. He also used trucks for transporting limestone and claimed a higher rate of depreciation. The hon'ble High Court held that the dominant purpose for which the assessee used the trucks has been found to be for his own business and hence the assessee is not entitled to higher rate of depreciation. A similar view was expressed by the hon'ble Karnataka High Court in the case of Veeneer Mills v. CIT [1993] 201 ITR 764 (Karn). We also notice that the Central Board of Direct Taxes has issued Circular No. 652, dated June 14, 1993 ([1993] 202 ITR (St.) 55 ) wherein the Central Board of Direct Taxes has also expressed a similar view. For the sake of convenience, we extract below Circular No. 652 referred to above : 'Circular No. 652, dated 14th June, 1993 To, All Chief Commissioners of Income-tax/ All Directors-Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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