GUJCO CARRIERS vs. COMMISSIONER OF INCOME TAX

ITR/271/1987HC GujaratGJHC24012003198718 February 2002Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE K.A.PUJ13 pages
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What did the High Court hold?

The High Court held that the Tribunal was not right in denying depreciation at 40% on the crane mounted on a motor truck. The Court reasoned that a mobile crane mounted on a truck constitutes a single unit known as a 'truck crane,' which is a well-known type of machinery adapted for use on roads. The truck is specially constructed to carry the crane. The Court took judicial notice of what a crane is and that it is an integral part of a truck-crane registered as a heavy motor vehicle, stating that courts and tribunals are not expected to be ignorant of such common facts. The Court found that the mobile crane, registered as a heavy motor vehicle, clearly falls within the expression 'motor lorries' (motor trucks) in Entry III E(1A) of Appendix 1, as it was used in the business of running the crane on hire. The question referred to the High Court was answered in the negative, in favour of the assessee and against the Revenue. The reference was disposed of with no order as to costs. No issue was expressly left undecided.

What were the facts?

The assessee, Gujco Carriers, purchased a mobile crane on November 19, 1981, for Rs. 10,87,248. For Assessment Year 1982-83, it claimed depreciation of Rs. 4,34,898 at 40%, contending it fell under Clause E(1A) of Part I of Appendix 1 to the Income Tax Rules, 1962, as it was used in the business of running it on hire. The Income Tax Officer disallowed the 40% depreciation, granting only 10%, stating 'crane' was not included in items eligible for higher depreciation. The CIT(Appeals) and the Income Tax Appellate Tribunal upheld this decision, finding no specific mention of 'cranes' in the relevant rules and rejecting the argument that a crane was an integral part of a lorry as a new plea raised before the Tribunal. The Tribunal also noted it was not shown how a crane was similar to a fork-lift truck, which was allowed higher depreciation.

What were the issues?

1. Whether the Income Tax Tribunal was right in law in holding that the assessee was not entitled to depreciation at 40% or even at the rate of 30% on a crane mounted on a motor truck, turning on the interpretation of Appendix 1 to the Income Tax Rules, 1962. Assessee's arguments: - A crane is an integral part of a motor truck and used for lifting/moving goods. Since the crane was registered as a heavy motor vehicle and used for hire, it was entitled to 40% depreciation. - The CBDT granted higher depreciation to fork-lift trucks, which are a type of crane, under Entry III (ii-D-9) of Appendix 1. Therefore, the crane should also receive higher depreciation. - The list in Appendix 1 is illustrative, and cranes registered as motor vehicles and used for hire should be read under 'motor lorries' in Entry III E(1A). - Relied on CIT v. Stanes Tyre & Rubber Products Ltd. (Madras HC) for the proposition that items not specifically mentioned can be brought under broader categories if they fit the description of use (e.g., for hire or reward, carrying goods). - Cited V.D. Swami & Co. Ltd. v. CIT (Madras HC) to show a lift was considered machinery. - Referred to Ishardas & Co. v. State of Maharashtra (Bombay HC) holding a mobile crane is a motor vehicle under the Motor Vehicles Act, 1939. Revenue's arguments: - The Tribunal did not record any specific arguments from the revenue.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 119,Section 56

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 271 of 1987

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and Hon'ble MR.JUSTICE K.A.PUJ

============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements?

2.

To be referred to the Reporter or not? : YES

3.

Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO

The order continues below.

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