Higher rate of depreciation allowable on crane as it is registered under Motor Vehicles Act

Higher rate of depreciation allowable on crane. So long as crane is registered under the Motor Vehicles Act, it is a motor vehicle.

ABCAUS Case Law Citation:
ABCAUS 3191 (2019) (11) ITAT

Important case law relied upon by the parties:
CIT Vs. Gaylord Constructions
Gujco Carriers Vs. CIT 122 taxman 206
Bose Abraham Vs. State of Kerala (2001) 9 KTR 366 (SC)

In the instant case, the appeal was filed by the assessee against the order of the Commissioner of Income Tax [Appeals] on the issue of depreciation allowable on the cranes.

The Assessing Officer had allowed depreciation @ 15% on the grounds that the cranes are not commercial vehicles.

The CIT(A) confirmed the addition made by the Assessing Officer on the grounds that it was not clear whether the cranes were mounted on vehicle or truck.

Before the Tribunal, it was argued that the cranes do not move on their own unless they are mounted on the vehicles which make them mobile.

The Tribunal observed that the cranes are registered as a motor vehicle under the motor vehicle Act and are used for commercial purpose.

The Tribunal further observed that though not used as a transport vehicle, Crane is a four wheeled excavator-cum transport vehicle used for excavation of earth and movement of the same, though for limited distances and for lifting of equipments.

The Tribunal opined that even though the purpose of Motor Lorry which is a heavy motor vehicle used for transport of goods from place to place, cannot be served by a crane.

The Tribunal also opined that the expression motor lorry covered by the Income Tax Rules providing for higher rate of depreciation can be basically used for a heavy vehicle such as crane which is also used for transport of excavated soil, sand or other goods, for a limited distance.

Therefore it was held that Cranes serve as a transport equipment as well and so long as it is registered under the Motor Vehicles Act, it is a motor vehicle within the meaning of the said term as held by the Hon’ble Supreme Court and High Courts.

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