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Income Tax Appellate Tribunal, ‘D’ BENCH MUMBAI
Before: SHRI AMIT SHUKLA & MS PADMAVATHY S
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 07/03/2025 passed by Addl/JCIT(A)-1, Bengaluru for the quantum of assessment passed u/s.143(3) for the A.Y.2015-16. 2. In various grounds of appeal assessee has only challenged disallowance of claim of depreciation on „cranes‟ which was Raja Construction claimed at 30% by the assessee and reduced to 15% by the ld. AO.
1. 3. The brief facts qua the issue involved are that assessee is a partnership firm engaged in the business of hiring of cranes and has been showing the income under the head „income from business and profession‟. The assessee is receiving rental income from the business of hiring of cranes and has let out cranes on hire to different parties which is mainly used for lifting and moving of heavy construction goods. Assessee had declared total hire charges at Rs.2,11,17,780/- and after claiming various expenses, had shown net loss for Rs.1,36,41,797/-. Ld. AO noted that major expenses constituted depreciation amounting to Rs.1,82,00,000/- claimed for cranes. Ld. AO noted that assessee has claimed depreciation @30% on crane, however, it does not fall in the category of “running of commercial vehicles on hire” for any kind of transportation business and therefore, assessee is only entitled for depreciation @15% and disallowed excess claim of Rs.91,00,000/-.
Ld. First Appellate Authority held that cranes are not eligible for higher depreciation @30% admissible to commercial vehicles and accordingly, he upheld the order of the ld.AO.
We have heard both the parties and also perused the relevant finding given in the impugned order. Before us it had been stated that this issue now stands covered by the series of decisions of the Hon’ble Gujarat High Court in the case of Prasad Multi Services (P) Ltd., vs. DCIT reported in 423 ITR 542 and in the Raja Construction case of Gujco Carriers vs. Commissioner of Income Tax reported in 256 ITR 50 were also relied upon the decision of the ITAT Mumbai Bench in the case of Samarth Lifters Pvt. Ltd., in ITA No. No.1781/Mum/2015. The main case of the ld. AO and ld. CIT (A) is that cranes “do not fall within the ambit of commercial vehicle, motor lorries, motor taxis etc., so as to enable assessee to claim depreciation @30%”. We find that exact same issue has been decided by the Hon‟ble Gujarat High Court in the case of Prasad Multi Services (P) Ltd., vs. DCIT (supra) wherein the following question was involved. “Whether, in the facts and circumstances of the case, the Income-tax Appellate Tribunal was right in confirming the order of the Respondent in limiting allowance of depreciation to 15% as against the claim at the rate of 30% on various types of cranes used in hiring business under section 32 of the Income- tax Act, 1961.”
The Hon‟ble Court have referred to their earlier decision of Hon‟ble Gujarat High Court in the case of Guco Carriers (supra) wherein, this issue has been discussed in detail which for the sake of ready reference is reproduced hereunder:- “35. We may refer to a decision of this Court in the case of Gujco Carriers (supra), on which the assessee has placed strong reliance. The issue before this Court in Gujco Carriers (supra) was that the assessee had purchased a mobile crane and claimed depreciation at 40% thereon stating that it was being used in the business of running it on hire and so it will fall under entry No. IIIE(1A) of Part I of Appendix I to the Income-tax Rules, 1962. This Court, after due consideration of all the relevant aspects of the matter, ultimately held that the mobile crane of the assessee which was registered as a heavy motor vehicle would clearly fall Raja Construction within the expression "Motor Lorries" in entry No. IIIE(1A) of the Table in Appendix I under rule 5 of the said Rules, since it was used by the assessee in its business of running the crane on hire. This Court, ultimately, ruled that the assessee was entitled to depreciation at the rate of 40% on the crane mounted on a motor- truck.
This Court, in the case of Gujco Carriers (supra), had the occasion to consider the question with regard to the rate of depreciation and the meaning of "Motor Lorry". We may quote the relevant observations made by this Court thus : "The controversy centres around the question whether mobile crane registered as a heavy motor vehicle under the Motor Vehicles Act and the Rules made thereunder with the R.T.O. would fall within the expression 'motor lorries' contained in item III E(1A) of Appendix 1 of the said Rules. The Tribunal has confirmed the orders of the Income-tax Authorities holding that since 'cranes' are not mentioned as independent item in Appendix 1, depreciation at the rate of 40% was not admissible to cranes, and that only the rate of 10% was admissible being the general rate applicable to machinery. The Tribunal, rejected the plea of the assessee that crane was an integral part of the motor lorry on which it was mounted and was worked by the same machine which provided traction to the lorry, on the ground that this required ascertainment of facts and fresh investigation. The Tribunal also rejected the assessee's contention that benefit of depreciation at 30% should be given to it since it was given to 'fork-lift trucks' under Instructions No. 617 issued on 13-9-1973 by the C.B.D.T. classifying 'fork-lift trucks' under item III (ii-D 9) of Appendix 1. Under the heading 'Machinery and plant' of item III of Appendix 1, Part I of the Table of Rates at which depreciation is admissible, read with Rule 5 of the Income-tax Rules, various items of machinery and plant are specified with the rates at which depreciation is to be allowed as are mentioned against them. The assessee claimed depreciation at 40% on its crane under Item III E(1A) of Appendix 1, which reads as follows :
Raja Construction "E. (1A) Motor buses, motor lorries and motor taxis used in a business running them on hire." In the alternative, the assessee claimed depreciation before the Tribunal on the basis of the C.B.D.T. Instruction No. 617 dated 13- 9-1973, which has been reproduced in the order of the Tribunal, as under: "132. Fork lift trucks - Rate of depreciation prescribed in Part 1 of Appendix 1 to Income-tax rules. Fork lift trucks would be classified under item III (ii) -D(9) of Appendix I to the Income-tax Rules, 1962 and would be entitled to depreciation at the rate of 30 per cent." I tem III (ii) - D(9) which is referred to in the aforesaid Instruction No. 617 which relates to fork lift trucks, reads as under : "Motor buses and motor lorries other than those used in a business of running them on hire." In the year 1973, the entry D(9) read as under : "Motor buses, motor lorries, motor taxis, motor tractors" The origin of word 'lorry' is uncertain. 'Lorry' means, (i) "a large strong motor vehicle for transporting goods etc.", (ii) "a long flat low wagon, or, (iii) "a truck used on railways or tramways", as per the Concise Oxford Dictionary. As per Webster's II New River Side University Dictionary, the word 'lorry', in the meaning relevant to the present context, would mean, 'a motor truck'. As per the Encyclopedia Britannica, truck is "also called lorry". Thus, the expression "motor lorries" in Entry III E (1A) of Appendix 1 would mean "motor trucks". "Truck" is introduced in following terms in the Encyclopedia Britannica : "Truck also called lorry any motor vehicle designed to carry freight or goods or to perform special services such as fire fighting. The truck was derived from horse-driven wagon technology, and some of the pioneer manufacturers came from the wagon business.
Raja Construction Because of their speed and flexibility, trucks have come to carry a quarter of the intercity freight in the United States, and they enjoy an almost total monopoly in intracity freight delivery. In 1896 Gottlieb Daimler of Germany built the first motor truck. It was equipped with a four-horsepower engine and a belt drive with two speeds forward and one in reverse. In 1898 the Winton Company of the United States produced a gasoline-powered delivery wagon with a single-cylinder six-horsepower engine. In World War I motor trucks were widely used, and in World War II they largely replaced horse-drawn equipment. A notable vehicle was the four-wheel-drive, quarter-ton-capacity, short-wheelbase jeep, capable of performing a variety of military tasks." Lorry or truck would, therefore, mean not only any motor vehicle designed to carry freight or goods but also to perform special services like fire fighting. Fire engine also called fire truck is a self propelled mobile piece of equipment used in fire fighting. There can be other special services to be performed by motor vehicles designed for such services. Thus, a lorry i.e. truck adapted or designed to carry a crane is meant for special services of lifting load, moving it side by side, rotating it or moving it horizontally. Most industrial trucks permit mechanized pickup and deposit of the loads, eliminating manual work in lifting as well as transporting. The crane truck is a portable boom crane mounted on an industrial truck. It may be used with hooks, grabs, and slings for bundled or coiled material. Industrial trucks which would also come within the expression 'motor lorries' are described as follows in the Encyclopedia Britannica : "Industrial truck carrier designed to transport materials within a factory area with maximum flexibility in making moves. Most industrial trucks permit mechanized pickup and deposit of the loads, eliminating manual work in lifting as well as transporting. Depending on their means of locomotion, industrial trucks may be classified as hand trucks or power trucks. Hand trucks with two wheels permit most of the load to be carried on the wheels, but some of the load must be assumed by the operator to balance the truck during movement. Common two- wheel hand trucks include the barrel, box, drum, hopper, Raja Construction refrigerator, paper-roll, and tote-box trucks. Four-wheel hand trucks are found in many more varieties, including dollies, high and low-bed flat trucks, carts, rack carriers, wagons, and various hand-lift trucks having mechanical or hydraulic lifting mechanisms for raising and lowering a load. Power trucks are propelled by batteries and an electric-motor or by an internal - combustion engine with either a mechanical drive or a generator and electric - motor drive. Propane and diesel engines are used in place of gasoline engines on some types. The non-lift platform truck is used simply for hauling, but other power trucks are provided with mechanisms, usually hydraulic, for lifting the loads. Forklift trucks are quipped with a forklike mechanism on the front end designed to pick up loads on specially designed platforms, called pallets, elevate the load to the desired height, transport it, and deposit it at the desired location and height. Ram trucks have a single protruding ram for handling coiled material. The crane truck is a portable boom crane mounted on an industrial truck; it may be used with hooks, grabs, and slings for bundled or coiled material. The straddle truck resembles a gantry crane on four pneumatic -tired wheels; the operator rides above the inverted U-frame, within which the load - lumber, bar steel, or pipe is carried on elevating bolsters. Other common types include high and low lift platform trucks, motorized pedestrian led, side-clamp, tractor, and side-loading trucks." It will, thus, be clear that motor vehicles like fire trucks, fork lift trucks and crane trucks which are designed for special services fall within the category of 'motor trucks' (also called 'motor lorries'). The word 'crane' when used for an inanimate object means a machine for moving heavy objects usually by suspending them from a projecting arm or beam. Crane is any of a diverse group of machines that not only lift heavy objects but also shift them horizontally. Movable cranes are mounted on railway cars, motor trucks or chassis equipped with caterpillar treads and the hoisting machinery is mounted so as to counterpoise part of the load on the boom and thereby, preventing the entire crane from overturning while carrying the load. The fork lift truck, widely used for moving goods between warehouse storages and shipping vehicles, "is a highly manoeuvrable crane adaptable to handling drums, crates, Raja Construction or loaded skids or pallets." (See Encyclopedia Britannica under the heading `crane'). Thus, a 'fork-lift truck' is also a type of crane. The expression 'truck crane' is well known in the truck industry. "The truck crane is a unit consisting of a crane house and boom mounted on a truck chassis,.......Originally assembled by contractors from crawler cranes and truck parts, the truck crane for years been manufactured and sold as a unit. Although the truck crane is difficult to move on soft or slippery ground, it is highly mobile on a firm footing and is easily moved over roads and highways. (See "Crane Hoist" - McGraw Hill - 'Encyclopedia of Science and Technology'). A crane is usually typed according to its undercarriage. Some of the cranes which undercarriage is not a truck are, 'crawler cranes' mounted on continuous tracks, the 'rail or locomotive crane' on special chasis with flanged wheels for use on railway tracks and 'floating crane' on a barge or scow. Therefore, search for the item 'cranes' in the Entries in Appendix 1 without keeping in mind the nature of equipment, was based on an erroneous premise. A crane mounted on a truck is a truck crane which is a well known machinery which can easily move over roads and highways and is not a stationary equipment. Truck crane is described under the heading 'crane' in Encyclopaedia Britannica, as under : "A commonly used type of small movable crane is the truck crane, which is a crane mounted on a heavy, modified truck. Such cranes frequently use unsupported telescoping booms; these are made up of collapsible sections that can be extended outward like the sections of an old nautical telescope or spyglass. The extension of the boom is usually managed hydraulically. Truck cranes make up in mobility and ease of transport what they lack in hoisting capacity." Thus, a mobile crane mounted on a truck constitutes a single unit known as a 'truck crane' which is adapted for use upon roads for special services. The truck on which the crane is mounted is constructed and adapted specially to carry the crane.
Raja Construction 'Goods carriage' as defined in section 2(14) of the Motor Vehicles Act, 1988 means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods. This definition is not confined only to carriage of freight which is narrower than the expression 'carriage of goods'. In the instant case, truck is adapted for use solely for carriage of the crane mounted on it. The mounted crane is attached to the truck which carries it. The test of carrying goods such as potatoes and tomatoes that require loading and unloading in context of carriage of freight when transported, as was suggested on behalf of the Revenue, will not be decisive. Unloading, in the context of truck crane where the crane remains mounted and attached to the truck when carried and even at the destination where it is put to use is not a relevant factor at all. Though not required to be loaded or unloaded like other goods transported in carriage of freight, the crane remains fixed, mounted on the truck which has been adapted for use solely for its carriage and such truck crane is used for special service of lifting and moving heavy objects. This is why such mobile crane is registered as a heavy motor vehicle which is a heavy goods vehicle as defined in section 2(16) of the Motor Vehicles Act. The approach of the Tribunal and the authorities below it that cranes are not mentioned specifically as an independent item falling in the categories for which higher depreciation allowance at the rate of 40% when used for hire and at 30% when not so used has been provided as against 10% of machinery in general, and therefore, they should be treated as falling in the general category of machinery, is an over-simplification of the matter. The approach of the Tribunal that the plea taken by the assessee that crane was an integral part of the motor vehicle on which it is mounted required ascertainment of facts and fresh investigation, amounts to imposing a burden on a person to prove something of which Court or Tribunal can take judicial notice. For example, if a witness deposes that he had seen a horse, the Court need not insist upon him for a proof of the anatomy of a horse and can take a judicial notice of horse as an animal. The Courts and Tribunals are not required to act dumb or ignorant of the facts of which judicial notice can be taken. Thus, just as a court can presume what a horse is, it can as well know what a crane is, and also Raja Construction that crane is an integral part of a truck-crane which is registered as a heavy motor vehicle. Lack of effort and knowledge sufficient for taking such judicial notice should not be a burden on the citizens in judicial proceedings. As provided by section 56 of the Evidence Act, no fact of which the Court will take judicial notice, need be proved. This equally applies to the Tribunals which are not in fact strictly bound by the rules of evidence. The mobile crane of the assessee which admittedly was registered as a heavy motor vehicle, would, for the above reasons, clearly fall within the expression 'motor lorries' (which means motor trucks) in Entry III E(1A) of the Table in Appendix 1 under rule 5 of the said Rules, since it was used by the assessee in its business of running the crane on hire."
We are not impressed by the vociferous submissions canvassed on behalf of the Revenue that the RTO registration under the provisions of the Motor Vehicles Act is a sine qua non for claiming depreciation. To put it in other words, the contention of the Revenue is that, unless the vehicle is registered in the name of the assessee under the Motor Vehicles Act, the assessee cannot be said to be its owner, and as such, he would not be entitled to depreciation allowance in respect thereof. The Revenue authorities have also proceeded on the same footing while declining depreciation at the rate of 30%.
The Hon‟ble Court has also referred and relied upon the decision of Hon‟ble Bombay High Court in the case of CIT vs. Dilip Singh Sardarsingh Bagga reported in 201 ITR 995 and Hon‟ble Calcutta High Court in the case of CIT vs. Salkia Transport Associates reported in 143 ITR 39.
A sequitur that emerges from the catena of judicial pronouncements is that registration under the Regional Transport Office, though statutorily mandated under the Motor Vehicles Act, does not constitute a sine qua non for claiming Raja Construction depreciation under the Income Tax Act. Jurisprudence has consistently held that ownership, for the limited purpose of depreciation, is to be construed in terms of real, beneficial ownership, and not merely the formal registration.
In the present case, the assessee is both the legal and registered owner of the cranes in question. Furthermore, the cranes stand duly registered in the name of the assessee under the Motor Vehicles Act. The assessee, though not engaged in transportation per se, is in the business of hiring out cranes to third parties. This, too, constitutes a commercial activity eligible for depreciation, provided the conditions under the Act are satisfied. As the ownership, both de jure and de facto is undisputed, the assessee‟s entitlement to depreciation cannot be gainsaid and must be upheld.
An additional corollary that flows inexorably from the settled judicial position is that a crane, when registered as a heavy motor vehicle, squarely falls within the broader nomenclature of “motor lorries” or “motor trucks” as employed in Appendix-I to Rule 5 of the Income Tax Rules. The Hon‟ble Courts have delved into the classificatory nuances of various types of cranes and have consistently concluded that mobile cranes, by virtue of their functionality and registration status, fall within the category of heavy trucks.
Raja Construction 11. In the present case, the mobile cranes are registered as heavy motor vehicles under Section 2(16) of the Motor Vehicles Act. Consequently, they fall within the ambit of “heavy trucks,” attracting a depreciation rate of 30%. This classification finds further resonance in CBDT Circular No. 617 dated 01.03.1973, which has been judicially noticed and affirmed by the Hon‟ble Gujarat High Court and other Courts, wherein it was clarified that even forklifts qualify as motor vehicles for the purpose of higher depreciation.
Accordingly, and in respectful conformity with the binding precedent of the Hon‟ble Gujarat High Court and the decision of the Co-ordinate Bench in Samarth Lifters Pvt. Ltd. vs. Addl. CIT in we hold that the assessee is entitled to depreciation at the enhanced rate of 30%. The disallowance made by the learned Assessing Officer, being devoid of factual or legal foundation, is therefore directed to be deleted.
In the result, appeal filed by the assessee is allowed.
Order pronounced on 30th June, 2025.