ACIT, CHATRAPATTI vs. M/S. CHAKIAT AGENCIES PVT. LTD., CHENNAI

Both the assessee and Revenue filed appeals against the respective orders of the Commissioner of Income Tax (Appeals)-1, Chennai, dated 01.08.2016 and pertain to assessment years 2012- 13 and 2013-14. Therefore, we heard all the four appeals together and disposing of the same by this common order.

Let’s first take assessee’s appeals. The only issue arises for consideration is in both the appeals is with regard to admissibility of higher rate of depreciation.

Shri P.M. Veeramani, the Ld. representative for the assessee, submitted that the assessee is engaged in the business of freight forwarding. In fact, the assessee was issued a licence of Multimodal Transport Operator by Ministry of Shipping. According to the Ld. representative, the assessee claimed depreciation in respect of trailers / lorries at the rate of 30%. The Assessing Officer granted only 15% depreciation on the ground that the assessee is not in the business of running the trailers / lorries on hire. The CIT(Appeals) confirmed the order of the Assessing Officer by placing reliance on the judgment of Apex Court in CIT v. Gupta Global Exim P. Ltd. (2008) 305 ITR 132.

Referring to the circular of the CBDT in Circular No.652 dated 14.06.1993, the Ld. representative for the assessee submitted that when the assessee has its trailers / lorries in its business of transport of goods, it is eligible for higher rate of depreciation. According to the Ld. representative, this Tribunal in the case of DCIT v. Sunthanther Assumtha (2016) 51 ITR (Trib)

On the contrary, Shri Avijit Rakshit, the Ld. Departmental Representative, submitted that the Apex Court in Gupta Global Exim P. Ltd. (supra), found that use of lorry in the business of transportation is the test for allowing higher depreciation. In the case before us, according to the Ld. D.R., the assessee has not used the trailer / lorry in the business of transportation, therefore, the Assessing Officer by applying the judgment of Apex Court in Gupta Global Exim P. Ltd. (supra) disallowed the claim of the assessee which was rightly confirmed by the CIT(Appeals).

We have considered the rival submissions on either side and perused the relevant material available on record. We have also carefully gone through the depreciation schedule. Motor lorries, taxies used in the business of running on hire is eligible for higher rate of depreciation. Therefore, the Supreme Court in Gupta Global Exim P. Ltd. (supra), after extracting the depreciation schedule, found that higher rate of depreciation is admissible on motor trucks used in the business of running them on hire. In the case before Apex Court, the above tests were not examined, therefore, the Apex Court remitted back the matter to the file of the CIT(Appeals) for de novo examination. In the case before us, the assessee is admittedly engaged in multi model transportation of goods on hire.

In view of the clarification of CBDT, when the motor lorries or trucks are used in the assessee’s business of transportation of goods on hire, then the assessee is eligible for higher rate of depreciation. In this case, the assessee is already engaged in the business of transporting goods on hire. When the assessee is using truck / lorry in the business of transportation of goods on hire, then it is eligible for higher rate of depreciation.

We have also carefully gone through the judgment of Apex Court in Gupta Global Exim P. Ltd. (supra). In the case before Apex Court, even though the Commissioner of Income Tax (Appeals) assumed that the assessee has reported transportation income of `12,50,639/- by way of running the vehicle on hire, it was only an assumption and inference drawn by the Commissioner of Income Tax (Appeals) only on the footing that the Assessing Officer treated `12,59,639/- as part of total business income. The Apex Court found that there is no determinative factor for deciding whether trucks were used in the transport business as claimed by the assessee in the course of running the business. In the present case, the assessee is engaged in the business of transportation of goods on hire. It is not in dispute that truck or lorry was used in the business of transportation on hire, hence the assessee is eligible for higher rate of depreciation. In view of the above, we are unable to uphold the orders of both the authorities below. Accordingly, the orders of both the authorities below are set aside and the Assessing Officer is directed to allow depreciation at higher rate.

Now coming to Revenue’s appeals, the first issue arises for consideration is disallowance made by the Assessing Officer under Section 14A of the Income-tax Act, 1961 (in short 'the Act').

We have heard the Ld. Departmental Representative and the Ld. representative for the assessee. It is not in dispute that the investment was made by the assessee in subsidiary companies.

The next issue arises for consideration is depreciation on printers.

Shri Avijit Rakshit, the Ld. Departmental Representative, submitted that the printer is an independent machinery. It can be used without linking with computer. Placing reliance on the judgment of Madras High Court in Dinamalar v. ITO (2016) 74 taxmann.com 14, the Ld. D.R. submitted that printer cannot fall under the definition of “computer”, therefore, it is not entitled for higher rate of depreciation.

We have heard the Ld. representative for the assessee also.

In the result, the appeals filed by the assessee are allowed and appeals filed by the Revenue are partly allowed for statistical purposes.