DCIT CIR 3, THANE vs. SAMARTH LIFETERS P.LTD, THANE

This is an appeal filed by the Revenue. The relevant assessment year is 2014-15. The appeal is directed against the order of the Commissioner of Income Tax-2, Thane [in short ‘CIT(A)’] and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the ‘Act’).

The issue in the present appeal falls in a narrow compass. The same being whether crawler cranes/trailers are in the nature of plant & M/s Samarth Lifters Pvt. Ltd. 15% as per the Assessing Officer (AO) or these are motor vehicles entitled for depreciation @ 30% as per the assessee.

Briefly stated, the facts are that the AO disallowed the claim of depreciation by the assessee u/s 32 of the Act on crawler cranes/trailers @ 30% as motor lorries used in the business of running them on hire and in its place granted depreciation @ 15% by holding it to be assets in the nature of plant & machinery. In appeal, the Ld. CIT(A), following the order of the ITAT ‘E’ Bench, Mumbai held that the assessee is entitled for claim of higher depreciation @ 30% on crawler cranes and dozers. 4. Before us, the Ld. DR relies on the order of the AO. On the other hand, the Ld. counsel for the assessee relies on the order of the ITAT in assessee’s own case for AY 2011-12 and AY 1998-99. 5. We have heard the rival submissions and perused the relevant materials on record. Same issue arose before the ITAT ‘E’ Bench, Mumbai in assessee’s own case for AY 2011-12 in ITA No. 1781/Mum/2015. The Tribunal vide order dated 08.12.2017 held as under : “12. The crawler cranes / dozers were not permanently registered under the Motor Vehicles Act, 1988 due to the fact that these vehicles through capable are not piled on public roads. The vehicles are deployed in port / factory premises and therefore do not require permanent registration under the Motor Vehicles Act, 1988. In the course of asst. proceedings, it was further M/s Samarth Lifters Pvt. Ltd. explained that even though the crawler cranes were not registered with road transport authorities directly, in certain states, it was required to pay vehicle tax by obtaining temporary permit for the period of its operation in the state. The ld. AO unfortunately has assumed such payments to be in the nature of temporary entry tax. The transport vehicles in Gujarat are governed of Bombay Motor Vehicle Tax Act 1958 which extends to the whole state of Gujarat. The fees paid for temporary permits issued by Gujarat Motor Vehicle department permitted operation of the crawler cranes on public roads also for the given period of time. The assumption made by the ld.AO that such fees are some sort of entry tax is factually in-correct. The copes of RTO tax paid receipts for crawler cranes to operate in Gujarat are at pg nos. 12 to 18 of paper book. A certificate from Govt. Approved RTO consultant, M/s.Sama Auto Consultant explaining the nature of tax paid appears at pg. No.19 of paper book. It is thus the case that under the Bombay Vehicle Tax Act, 1958, the crawler cranes owned by the appellant are recognised as heavy motor vehicles.

The ld. AO in the Asstt. Order has further discussed the type of work carried out by cranes and arrived at the conclusion that cranes unless registered under the Motor Vehicle Act could not be termed as “Motor Lorry” entitled for depreciation @ 30%. In the said regards, we observe that it is not possible to include each and every type of vehicle in the depreciation schedule. Due to rapid industrialization, the various types of machines used in transport business are increasing day after day with each machine carrying out a particular type of activity in a more efficient manner. These machines do not find direct representation in the depreciation schedule. In such situation, the functional similarly with the nature of activity performed by the listed machine has to be done to determine under what category a particular machine would fall.

We also found that CBDT vide Instruction No.617 dated 13.09.1973 has even included “forklift” in the category of motor vehicle entitled for higher depreciation of 30%. The Hon. Supreme Court in the case of Chairman Rajasthan State Road Transport Corp and Other-vs-Santosh and Others 7 SCC 94 (SC)(2013) have analyzed the definition of the term motor vehicle to hold even a tractor to be motor vehicle as it is capable of being adapted to run on public roads.

This issue of cranes being entitled for depreciation as a motor lorry has been examined in several judicial proceedings including in the appellants own case for A.Y.1998-99. The decisions relied upon are (i) DCIT Vs. Samarath Lifters Pvt. Ltd., Hon. Members “G” Bench ITAT, Mumbai dated 20.12.2004 for A.Y.1998- 99. (ii) CIT Vs. Samarth Lifters Pvt. Ltd., ITA No.127 of 2006 (Bombay High Court) dated 15.12.2008 – Dismissal of appeal for A.Y.1998- 99. (iii) Shethia Erectors & Materials Handlers Pvt. Ltd., ITA No.7254/Mum/97, Hon. Members, “A” Bench, ITAT Mumbai dated 08.01.2001. (iv) DCIT Vs. Mitesh L. Shethia, ITA No.2638/Mum/1999, Hon. Members “SMC-IV” Bench ITAT, Mumbai dated 14.02.2001 (The issue of crawler crane is covered here). (v) Crown Hiring Vs. ITO, ITA No.3799/Bom/1991, Hon. Members, “C” Bench ITAT, Mumbai dated 09.02.1998. (vi) Gujco Carriers Vs. CIT, 256 ITR 0050 Gujarat (2002) (vii) Sanco Trans Ltd. Vs. ACIT, 61 ITD 0317 Madras (1997) (That crawler crane is a vehicle and not plant & machinery is decided). (viii)CIT Vs. Galord Constructions, 190 Taxman 0406 (Kerala)(2010) (ix) Sanghvi Movers (P) Ltd. Vs. DCIT, 110 ITD 001 (Pune) (2008) (x) FIS Logistic P. Ltd. Vs. ACIT, 61 SOT 24 (Kolkata) (2014). (xi) Ansari Holding & Investment (P) Ltd. Vs. DCIT, 12 SOT 0438 (Hyderabad)(2007). (xii) John Energy Ltd. Vs. DCIT, 154 ITD 0451 (Ahmedabad)(2015) (xiii)Chairman Rajasthan State Road Transport Corp. & Others-vs Santosh & Others, 7 SCC 94 (SC) (2013)