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Facts
The assessee, primarily engaged in poultry product trading, claimed a higher depreciation rate of 30% on its motor lorries for AY 2015-16, arguing they were also used for transportation on hire. The Assessing Officer, acting on directions from the Pr. CIT under Section 263, restricted the depreciation to 15%, disallowing an excess of Rs. 83,65,917/-, a decision upheld by the CIT(A).
Held
The Tribunal dismissed the assessee's appeal, affirming that the assessee's financial statements clearly indicated its main business was poultry trading, and income from hiring out lorries was an independent stream, not integral to its core operations. Relying on the Supreme Court judgment in CIT Vs. Gupta Global Exim (P.) Ltd., the Tribunal held that higher depreciation is applicable only if the assessee is primarily in the business of running vehicles on hire, which was not established in this case.
Key Issues
Whether the assessee, primarily engaged in poultry trading but also generating freight income from hiring out its motor lorries, is entitled to a higher depreciation rate of 30% on these lorries, or if the standard rate of 15% applies because its main business is not transport on hire.
Sections Cited
143(3), 263, 143(2), 142(1), Income Tax Rules, 1962, Appendix I, Item III, sub-item 2(ii)
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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:-
1. 1. निर्धाररती/The Assessee : Premier Poultry Products Private Limited, 5-5-597, Abhyudaya Nagar, Chintakunt, L.B. Nagar – 500074, Hyderabad, Telangana. 2. रधजस्व/ The Revenue : The Deputy Commissioner of Income Tax, Circle – 5(1), Hyderabad.