COMMISSIONER OF INCOME TAX Vs. RAKESH JAIN

JUDGEMENT

(1.) This order shall dispose of IT Appeal Nos. 380 and 381 of 2011 filed by the Revenue under s. 260A of the IT Act 1961 (for brevity 'the Act'), challenging order dt. 30th June, 2011 passed by the Income-tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh (for brevity 'the Tribunal') in respect of the asst. yrs. 2006-07 and 2007-08. The Revenue has raised the issue that the depreciation @ 40 per cent on tippers, vibrator and vibrator soil compactor is impermissible and the Tribunal has erroneously treated those vehicles as commercial vehicles. According to Revenue, these vehicles are qualified for depreciation @ 15 per cent and must be treated as original plant and machinery. Facts are being taken as disclosed in the assessment order. The assessee-respondent filed return declaring an income of Rs. 6,42,330 on 31st Oct., 2007. The return were processed under s. 143(1) of the Act and subsequently, it was selected for scrutiny. Accordingly, statutory notices along with detailed questionnaire was issued to the assessee-respondent. In response to the aforesaid notices, the assessee through its authorized chartered accountant attended the proceedings and filed reply to the questionnaire along with other information.

(2.) The assessee-respondent derives income from civil construction and contract work and these items are considered as part of machinery on which depreciation is allowable @ 15 per cent only. Accordingly, the AO allowed the depreciation @ 15 per cent under s. 42(1)(ii), Expln. II, unnumbered proviso 3. The view of the AO is discernible from a perusal of paras 4, 2 and 5 which are as under :

(3.) It is, thus, obvious that excessive depreciation claimed by assessee-respondent was added to his income.