The Commissioner of Income Tax vs S.C. Thakur and Bros.

F.I. Rebello, J.—The Revenue has come in appeal on the following question:

(a) The substantial question of law which arises in the present appeal is regarding the correct interpretation of Section 32 of the Income Tax Act and other relevant provisions of the Act and whether on the facts and in the circumstances of the case and in law, the Hon''ble Tribunal erred in confirming the order of CIT(A) and allowing the depreciation to the assessee @ 50% and 40% respectively for A.Ys.1991-92 and 1996-97 on the value of trucks/dumpers owned by the assessee and further failed to appreciate that the assessee was only a civil contractor and was not engaged in the business of, wisely out asset i.e. trucks/dumpers transportation.

On behalf of the appellant the learned Counsel submits that considering the judgment of the Supreme Court in Commissioner of Income Tax Vs. Gupta Global Exim (P) Ltd., the correct test which the authorities below had to apply was whether the appellant was in the business of transportation and whether the vehicles were used in the said business.

In the instant case, the learned C.I.T. for the assessment year 1996-97 recorded a finding that the appellant was required to transport the earth from one place to another for filling and the earth so transported did not belong to the assessee and as such the appellants business receipts to a large extent, can be held to be price of the charges received for transporting the goods from one place to another. The learned tribunal also recorded a finding that the appellant had also shown transportation income from third parties such as Bharat Petroleum Ltd. in its assessment year 1996-97. Considering these facts the learned C.I.T. (A) arrived at the conclusion that the appellant is entitled to deprecation at higher rate as set out in its order.

In appeal the learned tribunal relied on the circular No. 652 dated 14.6.1993 issued by the C.B.D.T. which reads as under:

Subject : Section 32 of the Income Tax Act, 1961 - Rate of depreciation on motor lorries used in the business of transportation of goods - Regarding. Under sub item 2(ii) of Item No. III of Appendix 1 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 tem 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 and whether the user of the same in the assessee''s business of transportation of goods on hire would suffice.

In Board''s Circular No. 609 dated 29th July, 1991, it was clarified that where a tour operator or travel agent uses motor business or motor taxis owned by him in providing transportation services to tourists, higher rate of depreciation would be allowed on such vehicles. It is further clarified that higher depreciation will also be admissible on motor lorries used for the assessee''s business of transportation of goods on hire. The higher rate of depreciation however, will not apply if the motor business, motor lorries etc. are used in some other non-hiring business of the assessee.

A perusal of the said circular would make it clear that the higher rate of depreciation is also admissible when the motor lorry is used by the assessees in his own business of transportation of goods on hire. Considering the findings recorded by CIT (A) and the Boards Circular and the judgment of Supreme Court in Gutpa Global Exim (supra), in our opinion, no error can be found in the orders of the CIT (A) as also that of I.T.A.T.

In the light of that appeal dismissed.