DCIT, CIRCLE-1(1), SAMBALPUR vs. M/S. IB VALLEY TRANSPORT, JHARSUGUDA

1 ITA No .61/ CTK/2016 Asse ssment Year : 20 09- 201 0

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.61/CTK/2016 Assessment Year : 2009-2010

DCIT, Circle 1(1), Vs. M/s Ib Valley Transport, Sambalpur Lamtibahal, Brajarajnagar.

PAN/GIR No.AABFI 6752 Q (Appellant) .. ( Respondent)

Assessee by : Shri Mahendra Kumar Kedia, AR Revenue by : Shri D.K.Pradhan, DR

Date of Hearing : 02/11/ 2017 Date of Pronouncement : 07 /11/ 2017

O R D E R Per N.S.Saini, AM This is an appeal filed by the revenue against the order of the

CIT(A)-Cuttack, dated 30.11.2015 for the assessment year 2009-2010.

deleting the disallowance of excess depreciation on Tippers of

Rs.43,74,093/-.

business of transport. During the year under appeal, the assessee

claimed depreciation on Tippers of Rs.87,48,186/-. According to the

Assessing Officer, the assessee being in the business of transportation

was not entitled to claim depreciation at a higher rate of 30%. It was

2 ITA No .61/ CTK/2016 Asse ssment Year : 20 09- 201 0 allowable only in the business of letting vehicles on hire. In the case of

the assessee, who is doing transportation business, depreciation

allowable on Tippers is 15%. Therefore, he disallowed excess claim of

depreciation of Rs.43,74,093/- and added the same to the income of the

assessee.

filed appeal before the CIT(A).

motor Tippers or motor lorries on hire in the name of M/s. Ib Valley

Transport for transporting the goods of M/s. MCL and others from one

destination to another destination on hire for which it received transport

charges. The assessee has engaged his own vehicles in the business of

giving the same on hire for goods transport only. He relied on the CBDT

circular No.653 dated 14.6.1993, where it was clarified that higher

depreciation will be admissible on motor lorries used in the assessee’s

busienss of transportation of goods on hire. It was submitted that similar

views have been taken by the Hon’ble Gawhati High Court in the case of

ABC India Ltd vs CIT, 226 ITR 914(Gau) and Hon’ble Kerala High Court in

the case of CIT vs. Balakrishna Transports, 233 ITR 133 (Ker).

that the assessee is engaged in the transport busienss and used its

vehicles and tippers in carrying the goods from one destination to another

destination and in lieu of the same received transportation charges. As

3 ITA No .61/ CTK/2016 Asse ssment Year : 20 09- 201 0 the assessee has used such vehicles only in the transportation business

for which it was hired by the principal, therefore, it was eligible to claim

depreciation at a higher rate of 30%. The claim of the assessee was also

corroborated by the judicial pronouncements because the business of the

assessee is transporting goods on hire only. Hence, the CIT(A) directed

the Assessing Officer to allow depreciation @ 30% claimed by the

assessee.

appeal before us.

depreciation at 30% claimed by the assessee on use of its tippers in the

business of transportation was disallowed by the Assessing Officer on the

ground that the assessee was not engaged in the business of letting the

vehicles on hire. According to the Assessing Officer, as per section 32 of

the Act, depreciation on motor vehicles used for own business is allowable

@ 15% depreciation. Therefore, the CIT(A) was not justified in deleting

the excess depreciation claimed by the assessee at Rs.43,74,093/-.

supported the order of the CIT(A).

authorities and materials available on record. The undisputed facts of the

case are that during the year under consideration, the assessee was

4 ITA No .61/ CTK/2016 Asse ssment Year : 20 09- 201 0 engaged in the transport business and used its own tippers in the

business of transportation. The assessee claimed depreciation at a higher

rate of 30% on these tippers. The Assessing Officer disallowed the claim

of higher depreciation to the assessee on the ground that the assessee

has used tippers for its own business and has not let them out on hire.

ground that tippers were used in the business of transportation of the

assessee relying on the decision of Hon’ble Gawhati High Court in the

case of ABC India Ltd., (supra) and the decision of Hon’ble Kerala High

Court in the case of Balakrishna Transports (supra).

India Ltd. (supra) has held that the assessee was engaged in the business

of transport and carried on the business with the help of its own trucks as

well as hired trucks of other persons. The Assessing Officer disallowed

the claim for higher depreciation at 40% to the assessee which was

confirmed by the Tribunal. On further appeal, the Hon’ble Gawhati High

Court held that the assessee company used the motor vehicles and lorries

for running on hire, therefore, was entitled for higher rate of depreciation

at 40%.

Transport (supra) has held that the assessee was engaged in the business

of plying transport buses carrying passengers on different routes and

claimed depreciation on the buses at 40 per cent. The Assessing Officer

5 ITA No .61/ CTK/2016 Asse ssment Year : 20 09- 201 0 rejected the claim of higher depreciation @ 40% on the ground that buses

were not hired out but regular charges were recovered from passengers

from one point to another depending on the distance of travel. The

Tribunal allowed the claim. On further appeal to the Hon’ble High Court,

the Hon’ble High Court held that whether the payment was made by one

person or a group of persons or by individual passengers would be of total

irrelevance in the context. The real question was whether the assessee

engaged in the business of plying vehicles as an activity, used the

concerned vehicles for hire or not. The assessee firm was engaged in

transport activities. The transport activity was as regards plying of

transport buses carrying passengers on different routes determined by

the transport authorities. The passengers who travelled in such buses

travelled on hire and, therefore, the assessee was entitled to the higher

depreciation.

Hon’ble High Courts were cited by ld Departmental Representative during

the course of hearing. Therefore, we do not find any good reason to

interfere with the order of the CIT(A), which is hereby confirmed and

grounds of appeal of the revenue are rejected.

6 ITA No .61/ CTK/2016 Asse ssment Year : 20 09- 201 0 Cuttack; Dated 7 /11/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : DCIT, Circle 1(1), Sambalpur 2. The Respondent. M/s Ib Valley Transport, Lamtibahal, Brajarajnagar 3. The CIT(A)- Cuttack 4. Pr.CIT- Sambalpur 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack