- (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 : 4.2. As regards assessee's argument that the vibrator/soil compactor is not a roller, same is not acceptable. As per the brochure of the company 'Dynapac' filed during the course of proceedings, the vibrator/soil compactor has been categorized under the 'road roller' equipment and the named as vibratory rollers. The soil compactor is also heavy machinery utilized only for road construction and by no stretch of imagination it can be termed as heavy commercial vehicles. Likewise, the tipper is heavy machinery which is specifically designed and utilized in road construction. Even the assessee has admitted in its submissions that tipper is like a vibrator. Simply because it has been registered with the RTO will not make it heavy goods vehicle entitled for depreciation at higher rate of 30 per cent. 5. In view of the facts stated in foregoing paras, it is held that the assessee has claimed excessive depreciation on all the road equipment mentioned above. Accordingly, the excessive depreciation claimed to the tune of Rs. 6,56,606 is disallowed accordingly, added to the taxable income of the assessee. The assessee would be treated to have filed inaccurate particulars of income in respect of this addition, for which penalty proceedings under s. 271(1)(c) of the IT Act, 1961 have been initiated separately.
(3.) It is, thus, obvious that excessive depreciation claimed by assessee-respondent was added to his income.;