CHENNAI RADHA ENGINEERING WORKS PRIVATE LIMITED,CHENNAI vs. ADDL. CIT, CHENNAI

This appeal of the assessee is directed against the order of CIT(A) - 1, Chennai dated 18.02.2016 for the assessment year 2011-12.

Shri T.Banusekar, the learned representative for the assessee submitted that the only issue arises for consideration is disallowance of depreciation to the extent of Rs.69,18,594/-. According to the learned representative for the assessee, the assessee claimed higher rate of depreciation in respect of Hydraulic cranes, tipper, pay loader and JCB loaders. The assessing officer disallowed the higher rate of depreciation and allowed the depreciation at the rate of 15%. Referring to the order of the assessing officer, more particularly, at paragraph 4, the learned representative for the assessee submitted that the assessee claimed depreciation at the rate of 30%. However, the assessing officer restricted the same to 15%. Referring to the new Appendix I, under Item III(3)(ii), the learned representative submitted that the motor cars, motor lorries and motor taxis used in a business of running them on hire are eligible for a higher rate of depreciation of 30% as against the regular rate of 15%. The assessing officer observed that the assessee is not in the business of running motor vehicle or motor car or in the business of either transportation of goods or on hire.

Referring to the CBDT Circular No.652 dated 14.06.1993, the learned representative submitted that the higher rate of depreciation is available on the motor lorries used in the assessee’s business of transportation of business on hire. Therefore, according to the learned representative, when the assessee is using the tripper, JCB and other motor vehicles in the assessee’s own business, the assessee is eligible for higher rate of depreciation. Referring to the order of the assessing officer, the department representative submitted that this circular of CBDT was distinguished by the assessing officer on the ground that the assessee is not engaged in the business of transportation of goods on hire. According to the learned representative, when the assessee used motor vehicles in its own business, the same is eligible for higher rate of depreciation.

Referring to the judgment of the Apex Court in CIT Vs. Gupta Global Exim (P) Ltd. reported in [2008] 305 ITR 132 (SC), the learned representative submitted that in the case before the Apex Court, there was no evidence to indicate that the assessee was in the business of hiring out motor Lorries for running them to earn business income. In the case before us, according to the learned representative, materials available on record to substantiate that the assessee was using the motor car in its own business for earning the income. Therefore, the judgment of the Apex Court in Gupta Global Exim (P) Ltd. (supra) may not be applicable to the facts of the case.

On the contrary, Shri A.V.Sreekanth, the learned department representative submitted that the assessee engaged in the business of manufacturing of components and spares for conveyor systems and labour contract, operation and maintenance of conveyor systems at thermal power stations and port and generation of power. The assessee claimed depreciation in respect of Hydraulic cranes, tipper, pay loader and JCB loaders, etc. at the rate of 30%. The assessing officer restricted the same at 15% on the ground that the assessee’s business is not transport of goods.

We have considered the rival submissions on either side and perused the relevant material available on record. The assessee is engaged in the business of manufacturing of components and spares for conveyor systems and labour contract of operation and maintenance of conveyor systems at thermal power stations and port and generation of power. The assessee is not in the business of hiring out of motor Lorries or in the transport of goods. We have carefully gone through the new Appendix I, under Item III(3)(ii) of depreciation schedule which clearly says that Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after the 1st day of April, 1990 is eligible only at the rate of 15%. So the vehicles namely motor Lorries used in the business of running them on hire alone are eligible for depreciation at the rate of 30% which is evident from the new Appendix I, under Item III(3)(ii) of the depreciation schedule. In the case before us, admittedly, the assessee is not engaged in the business of running motor car or motor lorries on hire. It is also not the case of the assessee that the assessee is using the Hydraulic cranes, tipper, pay loader and JCB loaders, etc. in the business of transportation of goods. Transportation of goods admittedly is not the business of the assessee. Therefore, as rightly found by the assessing officer and CIT(A), the circular of the CBDT in circular No.652 is not applicable to the facts of the present case. Therefore, the CIT(A) has rightly placed his reliance in the judgment of the Apex Court in Gupta Global Exim (P) Ltd. (supra) and confirmed the order of the assessing officer. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed.

In the result, the appeal of the assessee stands dismissed.