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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: MS SUCHITRA KAMBLE & SHRI PRASHANT MAHARISHI
ORDER PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against order dated 17/08/2017 passed by CIT(A)-20, New Delhi for assessment year 2014-15.
The grounds of appeal are as under:- 1. “On the facts and in the circumstances of the case Ld.CIT(A) has erred in confirming an addition of Rs.8,02,313/- i.e. depreciation @ 15% on JCB, Trucks as against of 30% claimed by the assessee as per third proviso to clause (ii) of sub Section (1) of Section (32) of the Income Tax Act, 1961.
The assessee is a partnership firm and engaged in the business of Civil Contractor ship under the name and style of M/s S. N. Malhotra & Sons.
During the year under consideration, the assessee has shown net profit of Rs. 86,18,827/- on gross receipt of Rs.18,03,39,419/- thereby showing NP rate of 4.78%. Return of income was field on 25/10/2014 declaring income at Rs.86,18,830/-. The Assessing Officer made disallowance of Rs.2 lacs relating to unverified purchases and disallowance on excess depreciation on JCB, trucks etc amounting to Rs.8,02,313/-. The Assessing Officer also disallowed other expenses amounting to Rs.1,33,873/- and telephone expenses amounting to Rs.3,368/-. Thus, the Assessing Officer assess the total income at Rs. 97,58,380/-.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that the CIT(A) erred in confirming addition of Rs. 8,02,313/- i.e. depreciation at 15% on JCB, trucks as against of 30% claimed by the assessee as per 3rd proviso to Clause (ii) of Sub Section 1 of Section 32 of the Income Tax Act. The Ld. AR submitted that on similar facts, the Tribunal in for Assessment Year 2009-10 in case of ACIT Vs. Deepak Chadha decided the issue and allowed 40% of depreciation on commercial vehicle. The Ld. AR further submitted that the assessee is using the JCB machines and truck for his own business and that cannot be the ground for disallowance of the depreciation to the extent of 30%.
The Ld. DR relied upon the assessment order and the order of the CIT(A).
We have heard the Ld. DR and perused all the relevant material available on record. It is pertinent to note that the Assessing Officer disallowed depreciation on trucks and JCB @ 30% and allowed the same @15% holding that the assessee does not run the business of vehicles on hire. The assessee is undisputedly engaged in business of sub-contractor and does not run them on hire. The CIT(A) also confirmed the same. After perusal of 3rd proviso to Section 32(1)(ii) of the Income Tax Act, 1961, it can be seen that the said Section is not applicable in the present case of the assessee as the assessee is not running business of hiring of commercial vehicles. It is an admitted fact that the assessee is using trucks and JCB etc. for its own business. Besides this the Annexure I has also given the categories under which the 30% of depreciation is allowed. But assessee’s case does not fall in that category as well, as the present assessment year before us is 2014-15. Therefore, the CIT(A) as well as the Assessing Officer has rightly restricted the claim of depreciation to that of 15%. The decision cited before us by the Ld. AR is not applicable in the present case as in that case the use of the commercial vehicle was for hire and purchase and it was clearly mentioned in Annexure I of the Rules of Income Tax Rules, 1962 for granting 40% depreciation. The facts are different in present case. Therefore, there is no need to interfere with the finding of the CIT(A). The appeal of the assessee is dismissed.