commercial vehicles used for transportation of goods on hire are depreciable at 30% and not at 15%

Where assessee was commercially using vehicles for transporting goods on hire, assessee was entitled for depreciation at rate of 30 per cent according to CBDT Circular No. 609 dated 29-7-1991


Section 32, read with section 143, of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of (Rate of depreciation) - Assessment year 2009-10 - Assessee was engaged in business of transportation of municipal waste and claimed depreciation at rate of 30 per cent - Assessing Officer allowed depreciation at 15 per cent - Whether, where there was a commercial exploitation of vehicles for transporting goods on hire and thus nature of assessee's business was under ambit of Circular No. 609 dated 29-7-1991, assessee was entitled for depreciation at rate of 30 per cent - Held,  [In favour of assessee]


facts of the case:-

■		The assessee was engaged in the business of transportation of municipal waste. It had various vehicles namely wheel tippers, push carts and light good vehicles etc. It had claimed depreciation at the rate of 30 per cent.
■		The Assessing Officer confronted the assessee as to why depreciation should not be allowed at the rate of 15 per cent. The assessee had filed a detailed note indicating his activities and as to why depreciation was applicable at the rate of 30 per cent. The Assessing Officer was not satisfied with the contention of the assessee. He allowed the depreciation at the rate of 15 per cent and made an addition.
■		The Commissioner (Appeals) confirmed the action of Assessing Officer. HELD ■   The Board has issued a circulars No. 609 dated 29-7-1991 pointing out as to how this controversy is to be silenced. [Para 4] ■   The facts of the present case are perused in the light of the Bombay High Court decision in CIT v.S.C. Thakur & Bros. [2010] 322 ITR 463/[2009] 180 Taxman 348 as well as in the light of thecirculars No. 609 dated 29-7-1991 and No. 652 dated 14-6-1993 of the Board, then it would reveal that the Commissioner (Appeals) has failed to construe the circular in right perspective. According to the Commissioner (Appeals) the circular is applicable if an assessee has used the motor vehicle for transporting the goods on hire or the higher rate of depreciation would be applicable or given on hire like Taxis. In the present case, the assessee has been transporting the solid waste of municipality on hire. Thus, the very nature of the assessee's business is such which bring him in the ambit of the said circular. It is not the case where a person is running any consultancy firm and used a motor car for himself. Here the vehicles are used for transporting the goods of third concern by virtue of a contract. There is a commercial exploitation of the vehicles for transporting the goods on hire. Therefore, the assessee is entitled for higher rate of depreciation. The appeal of the assessee allowed and the disallowance is deleted.