TMI Blog2016 (6) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. It has also been held by various decisions that rectification proceedings u/s.154 cannot be initiated on debatable issues. Since the issue in the instant case is a highly debatable issue, i.e. whether the assessee is entitled to higher rate of depreciation on account of hiring of vehicles, therefore, we are of the considered opinion that it is not a case for rectification u/s.154 of the I.T. Act. We, therefore, are of the considered opinion that the AO could not have reduced the depreciation from 30% to 15% by resorting to provisions of section 154 of the I.T. Act. The Ld. Counsel for the assessee also made a statement at the bar t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was submitted by the assessee that it has objection for the proposed rectification since it has rightly claimed depreciation @30% on vehicles since the firm has earned income by giving vehicles on hire. It was submitted that as per the profit and loss account the assessee has received contract receipt of ₹ 10,51,87,040/- and motor car hire charges at ₹ 13,32,500/-. 3. However, the AO rejected the submission of the assessee on the ground that the rate of depreciation @30% applies only for motor taxies as per I.T. Rules, 1962. He accordingly made addition of ₹ 5,71,165/- being excess depreciation which was allowed earlier. 4. Before CIT(A) the assessee reiterated the same arguments as made before the AO. It was submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the assessing officer was justified in allowing depreciation @15%. The disallowance is sustained and the ground is rejected. 6. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : The following grounds are taken without prejudice to each other- On facts and in law, 1] The learned CIT(A) erred in confirming the disallowance of depreciation in respect of the vehicles on the ground that the appellant company was entitled to depreciation @ 15%0 and not 30% as claimed by the appellant company. 2] The learned CIT(A) erred in holding that the appellant had not given the vehicles on hire and hence, it was not entitled to claim higher depreciation @30%. 3] The learned CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved rental receipts on account of hiring of the vehicles. The AO and the CIT(A) rejected the claim of higher depreciation. However, the Tribunal allowed the claim of higher depreciation @30%. 7.1 Referring to the decision of the Hon ble Delhi High Court in the case of CIT Vs. Bansal Credits Ltd. reported in 259 ITR 69 he drew the attention of the Bench to the following (short notes) : On a plain reading of section 32 of the Income-tax Act, 1961, and entry III(2)(ii) in Appendix I to the Rules, it is clear that it is the end user of the specified asset which is relevant for determining the percentage of depreciation. Section 32 requires that the asset should be used for the purpose of the assessee s business and the entry in the Appen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther hand heavily relied on the order of the CIT(A). He submitted that the audit report of the assessee does not show that the assessee is running the business of hiring of vehicles. The higher rate of depreciation of 30% on motor cars is applicable only when these are used in a business of running them on hire. However, in the instant case as observed by the AO and the CIT(A) the assessee s main business is that of manufacturing of cement and concrete pipes and trading of cement and hiring of earth moving equipments. It is not the business of the assessee to hire motor cars. Therefore, the AO was fully justified in rectifying the assessment by reducing higher depreciation claimed by the assessee. He accordingly submitted that the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Urmila Enterprises Pvt. Ltd. (Supra) has held that when assessee receives rental receipts on hiring of vehicles the assessee is entitled to higher rate of depreciation @30%. In that case, the assessee company was engaged in the business of undertaking contract work for road construction and also trading in Ingergoll Rand products etc. It had received contract receipts as well as receipt on account of hiring of the vehicles. The AO rejected the higher claim of depreciation of 30% and allowed depreciation of 15% which was upheld by the CIT(A). On further appeal the Tribunal set aside the order of the CIT(A) and directed the AO to allow depreciation @30% on the vehicles. From the above, it is clear that when an assessee receives hire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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