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TMI Blog2017 (12) TMI 1478X X X X Extracts X X X X X X X X Extracts X X X X ..... transport contracts, filed its return of income by declaring total income of Rs. 3,95,57,900/-. In the return of income, assessee has claimed higher depreciation at 30% on Trailers, Dumpers & Motor Lorries, which were used for transportation business. The Assessing Officer has disallowed the higher depreciation and only granted normal depreciation at 15% and assessment is completed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). 3. During the course of assessment proceedings, the Assessing Officer has noted that the assessee has claimed depreciation on Trailers, Dumpers & Motor Lorries at 30%. Usually, the rate of depreciation is 30%, only in the case of vehicles, which are let out for hire and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, liner agent charges, storage charges etc., apart from transportation charges. Besides, as per the assessee's submissions, transportation is also one of the service/facility provided by the assessee to its customers. As seen from the partnership deed, the business of the assessee is 'shipping, clearing and forwarding, steamer agency, etc. or any other business as may be agreed upon by the partners'. Therefore, the activity of transportation is only incidental to the main activity of clearing and forwarding. Accordingly, Assessing Officer disallowed the higher depreciation claimed by the assessee. 5. On appeal before the ld. CIT(A), it was submitted that the assessee is carrying on the business of C & F and also transport contracts. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the Assessing Officer is that the main activity of the assessee is only C & F agency and transportation business carried out by the assessee by using Trailers, Dumpers & Motor Lorries is only incidental to the business of the assessee. Therefore, he only allowed normal depreciation at 15%. Before the ld. CIT(A), the assessee has filed all the details of the business receipts. The ld. CIT(A) by considering the details, gave a categorical finding that in the total gross receipts of Rs. 55,75,16,582/-, the assessee has received Rs. 22,99,64,332/- from transport business. Therefore, he is of the opinion that the transportation business is carried out by the assessee by using the vehicles, such as Trailers, Dumpers & Motor Lorries is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court and High Courts relied on by the AR in this regard. The Hon'ble Andhra Pradesh High Court in the case of CIT v A.M. Constructions (supra) has held that tippers are eligible for higher rate of depreciation as the substantial income of the assessee is from hiring of tippers. The relevant portion of the orders of the Hon'ble High Court is extracted below:- The fact that the tippers are eligible for depreciation is not disputed, but the o dispute is with regard to the rate at which the depreciation to be allowed. I finding of the Tribunal is that in view of the fact that substantial income of t assessee is from hiring of these tippers he would be entitled to depreciation 40% notwithstanding the fact that he uses them for his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble High Court of Andhra Pradesh and the Hon'ble Supreme Court, discussed above, I am of the view that the assessee is eligible for depreciation at higher rate as it is running its vehicles i.e. motor lorries, trailers and dumpers on hire. Accordingly, the AO is directed to allow the depreciation claim of the assessee." 11. From the above order of the ld. CIT(A), it is clear that transportation business carried out by the assessee by using Trailers, Dumpers & Motor Lorries is not an incidental to the business of the assessee. Out of the gross receipts of Rs. 55,75,16,582/-, the assessee received Rs. 22,99,64,332/-. The ld. Departmental Representative failed to produce any material to show that the above finding given by the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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