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2016 (11) TMI 653 - ITAT CHENNAI

2016 (11) TMI 653 - ITAT CHENNAI - [2016] 51 ITR (Trib) 154 - Benefit of higher depreciation for pay loaders, dozers and water tankers - transportation of goods in its business of transportation of goods on hire - Held that:- Assessee was engaged in the business of transportation and the work of cleaning and loading were incidental to this. - Having a look at Circular No.652 dated 14.6.1993 says that motor lorries used by the assessee in the business of transportation of goods on hire would .....

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o transport the goods provided by M/s Anand Transport from one place to another. We cannot say that element of ‘hiring’ was absent. The Bombay High Court in the case of CIT vs M/s SC Thakur & Bros [2009 (1) TMI 20 - BOMBAY HIGH COURT ] has clearly held that Circular No.652(supra) was admissible when the motor lorries were used by the assessee in its own business of transporting of goods on hire. Thus the assessee is entitled for depreciation on dumpers and pay loaders at the higher rate - Decide .....

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benefit of higher depreciation for pay loaders, dozers and water tankers used by the assessee . 3. Facts apropos are that the assessee, engaged in the business of transport, had filed his return for the impugned assessment year declaring income of ₹ 35,79,790/-. During the course of assessment proceedings, it was noted by the Assessing Officer that assessee had claimed higher rate of depreciation @ 30% on pay loaders, dozers and water tankers. As per the Assessing Officer, higher rate of .....

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om wharf, transporting to designated stock yard by trucks, stacking at stock yard, loading from stock yard into trucks, carting from stock yard to railway siding. As per the Assessing Officer, there was a further clause in the said contract which stipulated that vehicles in the nature of pay loaders, dozers and water tankers were to be transferred back to the assessee on completion of the contract period or on completion of shipping of 36 lakhs tonnes materials for a small residual value. Though .....

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ee was not only using its own lorries but were also using vehicles which were provided by M/s Anand Transport and pay loaders were like cranes used for moving goods from one place to another. As per the Assessing Officer, neither the cranes nor pay loaders were used by the assessee in its own business of hiring. According to him, earth moving machines and tipper were not road transport vehicles. For this, reliance was placed on the judgment of Andhra Pradesh High Court in the case of CIT vs Prog .....

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er had failed to consider CBDT Circular No. 652(supra) in its proper sense. As per the assessee, meaning of the term hiring was something which was temporarily given for use for an agreed payment. Assessee also contended that pay loaders were similar to lorries with trolleys akin to lorries with long body. In support of its contention that it was engaged in the business of hiring, assessee furnished its Profit & Loss Account which inter alia reflected income of ₹ 10.55 crores from busi .....

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Co (supra) relied on by the Assessing Officer. As per the assessee, in the said case the question was whether trippers could be considered as road transport vehicles for giving investment allowance. The CIT(A) was appreciative of the above contentions of the assessee. According to him, there was an element of hiring in the activities of the assessee. Relying on the Profit & Loss Account of the assessee and agreement entered into by the assessee with M/s Anand Transport and also transport bi .....

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@ 30%. 5. Now before us, the ld. DR, strongly assailing the order of the CIT(A) submitted that depreciation @ 30% given in Appendix 1 to Income Tax Rules 1962 at II(3)(ii) clearly mentions vehicles which are used in the business of running them on hire. As per the ld. DR, assessee was using his own vehicles for his own business and there was no hiring whatsoever of the vehicles to M/s Anand Transport or any other concern. According to the ld. DR, the CIT(A) erred in holding that the assessee wa .....

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decision of the CIT(A) was also supported by the order of the Kolkata Bench of the Tribunal in the case of Ashirbad Real Estate & Transport in I.T.A.No. 1591/Kol/2011 dated 18.9.2015 and in the case of M/s Avaniash Transport vs JCIT in I.T.A.No. 1909/Kol/2012 dated 13.8.2015. 7. We have considered the rival contentions and the orders of the authorities below. There is no dispute that the assessee was engaged in the business of transportation of coal and iron ore. No doubt, a reading of the .....

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at were used by it. The consideration agreed was @ Rs. .35/- per metric ton. What the assessee was doing for M/s Anand Transport is given under the terms of payment appearing in clause 4 of the agreement entered with M/s Anand Transport and it is reproduced hereunder: 4. Payment: Supply of Pay Loader for Hatch work, Loading Coal from Wharf using Pay loaders, Transporting to stock yard within Chennai port, Hi-stacking at Stock yard, Loading into trucks at Stock Yard by Pay Loader, Transporting to .....

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erson or whether user of same in assessee s business of transportation of goods on hire would suffice 1. Under sub-item 2(ii) of Item-III of appendix I to the Income-tax Rules, 1962, higher rate of depreciation is admissible on motor buses, motor lorries and motor taxis used in a business of running them on hire. A question has been raised as to whether, for deriving the benefit of higher depreciation, motor lorries must be hired out to some other person or whether the user of the same in the as .....

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The higher rate of depreciation, however, will not apply if the motor buses, motor lorries, etc are used in some other non-hiring business of the assessee. 9. It is clear from the above clarification that motor lorries used by the assessee in the business of transportation of goods on hire would be eligible for higher rate of depreciation. In other words, by virtue of this Circular, higher rate of depreciation @ 30% mentioned in Part II(3)(ii) of Appendix to the Income Tax Rules would get an ex .....

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and Transport from one place to another. We cannot say that element of hiring was absent. The Bombay High Court in the case of CIT vs M/s SC Thakur & Bros has clearly held that Circular No.652(supra) was admissible when the motor lorries were used by the assessee in its own business of transporting of goods on hire. In the said case, assessee was a civil contractor which was required to transport earth from one place to another as part of its contract work. The Kolkata Bench of the Tribunal .....

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nature of business carried on by the assessee and income disclosed thereon. It is seen that the assessee has disclosed income from transportation by dumpers and pay loaders in its profit and loss account and therefore we hold that the assessee is using these vehicles for transportation of goods of other persons. It is pertinent to note that CBDT Circular No. 652 dated 14.6.1993 on this subject states that assessee is entitled to higher rate of depreciation when the vehicles are used by the asse .....

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