The Commissioner Of Income Tax vs M/S. S.C.Thakur & Bros on 27 January, 2009

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            IN     THE HIGH COURT OF JUDICATURE AT BOMBAY

                   ORDINARY ORIGINAL CIVIL JURISDICTION

                 INCOME TAX APPEAL NO. 496 OF 2005

      The Commissioner of Income Tax,




                                                                                       
      Thane-II, Vardan, MIDC Building,
      9th Floor, Room No. 16,
      Wagale Industrial Estate,




                                                           
      Thane (W)                                          ...      Appellant
                                                                  App

                                      Versus

      M/s. S.C.Thakur & Bros.,




                                                          
      At Post Gavan, Tal. Panvel,
      Dist. Raigad                                 ...    Respondents

      Mr.Vimal   Gupta         i/by    Ms.         Devki        Iyer       for      the
      Appellant.




                                            
      Ms. Aasifa Khan for Respondents.
                           
                       CORAM: F.I. REBELLO, &
                              R.S. MOHITE, JJ.

DATED: JANUARY 27, 2009

ORAL JUDGMENT (Per F.I. Rebello,J.):

. The Revenue has come in appeal on the following

question :

(a) The substantial question of law which

arises in the present appeal is regarding

the correct interpretation of Section 32 of

the Income Tax Act and other relevant

provisions of the Act and whether on the

facts and in the circumstances of the case

and in law, the Hon’ble Tribunal erred in

confirming the order of CIT(A) and allowing

the depreciation to the assessee @ 50% and

40% respectively for A.Ys.1991-92 and

1996-97 on the value of trucks/dumpers owned

by the assessee and further failed to

appreciate that the assessee was only a

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civil contractor and was not engaged in the

business of, wisely out asset i.e.

trucks/dumpers transportation.”

2. On behalf of the appellant the learned counsel

submits that considering the judgment of the Supreme

Court in C.I.T. Vs. Gupta Global Exim (P) Ltd.

(2008) 171 Taxmann 474 (SC) the correct test which

the authorities below had to apply was whether the

appellant was in the business of transportation and

whether the vehicles were used in the said business.

3. In the instant case, the learned C.I.T. for the

assessment

year 1996-97 recorded a finding that the

appellant was required to transport the earth from

one place to another for filling and the earth so

transported did not belong to the assessee and as

such the appellants business receipts to a large

extent, can be held to be price of the charges

received for transporting the goods from one place

to another. The learned tribunal also recorded a

finding that the appellant had also shown

transportation income from third parties such as

Bharat Petroleum Ltd. in its asssessment year

1996-97. Considering these facts the learned C.I.T.

(A) arrived at the conclusion that the appellant is

entitled to deprecation at higher rate as set out in

its order.

    4.     In    appeal the learned tribunal relied                    on     the

    circular      No.     652      dated 14.6.1997 issued              by     the

    C.B.D.T.      which reads as under :


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      "Subject      :     Section 32 of the            Income         Tax

     Act,    1961      - Rate of depreciation on                 motor

     lorries        used       in         the      business           of

transportation of goods – Regarding.

Under sub item 2(ii) of Item No. III of

Appendix 1 to the Income Tax Rules, 1962,

higher rate of depreciation is admissible on

motor buses, motor lorries and motor taxis

used in a business of running tem on hire.

A question has been raised as to whether for

deriving the benefit of higher depreciation,

motor

lorries must be hired out to some

other person and whether the user of the

same in the assessee’s business of

transportation of goods on hire would

suffice.

2. In Board’s Circular No. 609 dated 29th

July, 1991, it was clarified that where a

tour operator or travel agent uses motor

business or motor taxis owned by him in

providing transportation services to

tourists, higher rate of depreciation would

be allowed on such vehicles. It is fuhrer

clarified that higher depreciation will also

be admissible on motor lorries used for the

assessee’s business of transportation of

goods on hire. The higher rate of

depreciation however, will not apply if the

motor business, motor lorries etc. are used

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in some other non-hiring business of the

assessee.”

5. A perusal of the said circular would make it

clear that the higher rate of depreciation is also

admissible when the motor lorry is used by the

assessees in his own business of transportation of

goods on hire. Considering the findings recorded by

CIT (A) and the Boards Circular and the judgment of

Supreme Court in Gutpa Global Exim (supra), in our

opinion, no error can be found in the orders of the

CIT (A) as also that of I.T.A.T.

6. In the light of that appeal dismissed.

(R.S. MOHITE, J.) (F.I. REBELLO,J.)

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