M/s Hyderabad Ammonia & Chemicals Pvt. Ltd., Hyderabad V. DCIT, Circle -2(2), Hyderabad

ITA 122/HYD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74482 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V L N SUDHAKAR
• Keywords: Business income; Depreciation; Additional depreciation; Condonation of delay; Revised return; Revenue expenditure
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NOS. 121 & 122/HYD/2012 ASSESSMENT YEAR: 2005-06 & 2007-08 M/S HYDERABAD AMMONIA & CHEMICALS PVT. LTD., HYDERABAD. PAN AAACH6205M VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 2(2), HYDERABAD. ASSESSEE RESPONDENT ASSESSEE BY: SRI V.L.N. SUDHAKAR REVENUE BY: SRI JEEVANLAL LAVIDIYA DATE OF HEARING: 23/01/2014 DATE OF PRONOUNCEMENT: 23/01/2014 O R D E R PER CHANDRA POOJARI, AM: BOTH THESE APPEALS PREFERRED BY THE ASSESSEE ARE D IRECTED AGAINST SEPARATE ORDERS OF THE CIT(A)-III, HYDERABA D DATED 23/09/2011 FOR THE ASSESSMENT YEARS 2005-06 AND 200 7-08. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THEY W ERE CLUBBED AND HEARD TOGETHER AND, THEREFORE, A COMMON ORDER I S PASSED FOR THE SAKE OF CONVENIENCE. 2. THERE WAS A DELAY OF 48 DAYS IN FILING THESE APP EALS AND TO THIS EFFECT THE M.D. OF THE ASSESSEE COMPANY HAS FI LED PETITION FOR CONDONATION OF DELAY IN FILING THESE APPEALS WHEREI N HE WAS STATED THAT THE APPELLATE ORDER WAS RECEIVED BY HIS OFFICE WHEN HE WAS SICK AND NOT ATTENDING THE OFFICE, THE FACT OF WHIC H WAS NOT BROUGHT I.T.A. NOS. 121 & 122/HYD/2012 M/S HYDERABAD AMMONIA & CHEMICALS PVT.LTD. 2 TO HIS NOTICE. WHEN CA CAME TO SEE HIM AND ON ENQUI RY ABOUT THE CASE, HE CAME TO KNOW THAT THE ORDER WAS RECEIVED B Y HIS OFFICE WHICH FACT WAS NOT INFORMED BY HIS STAFF SINCE THE PETITIONER WAS SICK. IMMEDIATELY HE REQUESTED THE AUDITOR TO PREPA RE AND FILE THESE APPEALS AND HENCE, CAUSED THE DELAY. HE ALSO FILED AN AFFIDAVIT AFFIRMING THE SAID REASONS IN THE SAME. 3. AFTER HEARING THE LEARNED DR, WE ARE OF THE VIEW THAT THE ASSESSEE IS PREVENTED BY SUFFICIENT REASON FOR NOT FILING THE APPEALS WITHIN THE STIPULATED TIME AND, THEREFORE, WE CONDO NE THE SAID DELAY IN FILING THESE APPEALS AND ADMIT THE SAME FOR ADJU DICATION. 4. THE GROUNDS RAISED BY THE ASSESSEE ARE COMMON IN BOTH THE APPEALS, EXCEPT THE DIFFERENCE IN THE ADDITION, WHI CH ARE AS UNDER: 1. THE ORDER PASSED BY THE DCIT IS AGAINST THE ASSE SSEE, IN SO FAR AS IT IS CONTRARY TO FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE AUTHORITIES ERRED IN UNDERSTANDING THE NATUR E AND USE OF THE TANKERS, WHICH ARE SPECIFICALLY DESIGNED AND REGISTERED WITH THE TRANSPORT AUTHORITIES AS COMMERCIAL VEHICL ES. 3. THE LEARNED AUTHORITIES ERRED IN DISALLOWING THE CLAIM OF HIGHER RATE OF DEPRECIATION ON THE TANKERS USED IN THE BUSINESS, OBSERVING THAT THE SAME ARE NOT GIVEN ON HIRE, IN SPITE OF THE HIRE CHARGES OFFERED FOR TAXATION. 4. THE ASSESSEE CRAVES LEAVE TO ADD AMEND MODIFY AN Y OF THE ABOVE GROUNDS AT THE TIME OF HEARING. 5. IN VIEW OF THE ABOVE GROUNDS AND SUCH OTHER GROU NDS THAT MAY BE URGED AT THE TIME OF HEARING THE APPEAL, THE ASSESSEE PRAYS FOR THE DELETION OF THE ADDITION AND ALLOW TH E CLAIM OF HIGHER RATE OF DEPRECIATION AND RENDER JUSTICE. 3. TO DISPOSE OF THESE APPEALS, WE REFER TO THE FAC TS FROM AY 2005-06 IN ITA NO. 121/HYD/2012. BRIEFLY THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A COMPANY WHICH IS ENGAGED IN BUSINE SS OF MANUFACTURING AND TRADING OF INDUSTRIAL GAS/LIQU OR AMMONIA. AFTER MAKING PURCHASES OF MATERIAL AT MUMBAI, THE S AME ARE TRANSPORTED BY THE ASSESSEE TO HYDERABAD USING OWN I.T.A. NOS. 121 & 122/HYD/2012 M/S HYDERABAD AMMONIA & CHEMICALS PVT.LTD. 3 TRUCKS/TANKERS AND ALSO THROUGH OTHER TANKERS TAKEN ON HIRE FROM OTHERS. THE AMMONIA BROUGHT FROM MUMBAI, IS ST ORED IN THE FACTORY PREMISES, WHERE IT IS CONVERTED PARTLY INTO GAS AND PARTLY INTO LIQUID FORM. THE CONVERTED AMMONIA GAS IS FILLED IN SMALL CYLINDERS AND THEN SOLD TO VARIOUS CUSTOMERS IN AND AROUND HYDERABAD. FOR THE ASST. YEAR 2005-06, THE A SSESSEE HAS FILED RETURN OF INCOME ON 28.10.2005, SHOWING I NCOME OF RS.17,70,470/-. THE SAID RETURN WAS PROCESS-, U/S.143(1) OF THE ACT, THEREBY ACCEPTING THE RETURNED INCOME. AS STAT ED ABOVE, FOR TRANSPORTING LIQUOR AMMONIA FROM MUMBAI TO HYDE RABAD, AND FOR DELIVERING THE SAME TO CUSTOMERS, THE ASSES SEE HAS USED OWN TANKERS AS WELL AS TANKERS TAKEN ON HIRE F ROM OTHERS. ON SUCH TANKERS OWNED BY THE ASSESSEE, THEY ARE ELI GIBLE FOR ALLOWANCE OF DEPRECIATION A T THE NORMAL RATE OF 25%. HOWEVER, THE ASSESSEE HAS CLAIMED SUCH DEPRECIATION AT 40%. SINCE, BY MAKING SUCH EXCESS CLAIM OF DEPRECIATION ON TANKERS , TAXABLE INCOME IN THE HANDS OF THE ASSESSEE FOR THE ASST. Y EAR 2005- 06, HAS ESCAPED ASSESSMENT, THE AO REOPENED THE ASSESSMENT U/S.147 OF THE ACT, AND THUS, ISSUED A N OTICE U/S.148 OF THE ACT ON 31.10.2008. IN RESPONSE TO SA ME, THE ASSESSEE HAS FILED A REVISED RETURN OF INCOME ON 30 /12/2008, SHOWING TOTAL INCOME OF RS.19,20,790/-. IN THAT RET URN, THE ASSESSEE HAS RESTRICTED DEPRECIATION CLAIM ON CYLIN DERS AT 80%, AS AGAINST 100% CLAIM MADE IN THE ORIGINAL RET URN. THE ASSESSEE, HOWEVER, HAS CLAIMED DEPRECIATION AT THE SAID HIGHER RATE OF 40% ON THE TANKERS OWNED BY IT. 3.1. DURING THE ASSESSMENT PROCEEDINGS, ON QUERY R AISED BY THE AO TO EXPLAIN AS TO WHY DEPRECIATION SHOULD NOT BE ALLOWED ON SUCH TANKERS AT 25%, THE ASSESSEE HAS SUBMITTED THAT THOSE TANKERS, THOUGH MOSTLY USED IN THEIR OWN BUSINESS, THE SAME WERE ALSO PARTLY USED FOR TRANSPORTING CYLINDER TO OTHERS. STATING THAT THEY HAVE COLLECTED HIRE CHARGES FOR T HE SAME FROM THE CUSTOMERS, IT WAS SUBMITTED THAT EVEN PARTIAL U SE OF SUCH I.T.A. NOS. 121 & 122/HYD/2012 M/S HYDERABAD AMMONIA & CHEMICALS PVT.LTD. 4 VEHICLES FOR THAT PURPOSE WOULD ENTITLE THEM TO DEP RECIATION AT HIGHER RATE OF 40%. 3.2. FURTHER, DURING THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE HAS SUBMITTED THAT TRUCKS/TANKERS IN THEIR CASE FAL L UNDER THE HEAD-ASSETS-III(3)(III), 'COMMERCIAL VEHICLES', WHI CH WERE ACQUIRED ON OR AFTER 1.10.98 BUT BEFORE 1.4.99 AND ARE PUT TO USE FOR ANY PERIOD BEFORE 1.4.99 FOR THE PURPOSE OF BUSINESS OR PROFESSION. FURTHER IN THIS REGARD, REFERRING TO TH E THIRD PROVISO TO CLAUSE (II) OF SUB-SECTION (1) OF SECTION 32 OF THE ACT, THE ASSESSEE SUBMITTED THAT SUCH TANKERS IN THEIR CASE ARE ENTITLED TO DEPRECIATION AT 40%. 3.3. HOWEVER, THE AO DID NOT ACCEPT SUCH SUBMISSION OF THE ASSESSEE. HE NOTED THAT THE VEHICLES IN QUESTION WE RE ACQUIRED AFTER 1.4.99 AND HENCE THE ASSESSEE IS NOT CORRECT IN CLAIMING DEPRECIATION AT 40%. THE DATES OF ACQUISITION OF TH OSE VEHICLES AS FURNISHED BY THE ASSESSEE VIDE THEIR LE TTER DATED. 08.12.2009, ARE REFERRED TO BY THE AO, IN PARA 8 OF THE ASSESSMENT ORDER. STATING THAT NONE OF THE VEHICLES HAS BEEN ACQUIRED DURING THE SPECIFIED PER IOD, HE HELD THAT THE SAME WOULD NOT FALL UNDER THE CLASS MENTIO NED IN III (3)(III) OF THE DEPRECIATION SCHEDULE. 3.4. THE AO FURTHER NOTED THAT THE ASSESSEE IS MAIN LY A DEALER IN PURCHASE AND SALE OF AMMONIA. REFERRING TO THE T URNOVER, BOTH UNDER PURCHASE AND SALES OF AMMONIA, DURING TH E THREE ASSESSMENT YEARS INCLUDING THE CURRENT ASSESSMENT YEAR, HE NOTED THAT THE INTENTION OF THE ASSESSEE F OR ACQUIRING SO MANY TANKERS IS CERTAINLY FOR OWN USE AND NOT TO GIVE THEM ON HIRE. HE FURTHER NOTED, THAT USER OF TANKERS TAK EN ON HIRE FROM THE PROMOTERS OF THE ASSESSEE COMPANY, SHOWS T HAT OWN TANKERS/TRUCKS ARE NOT ADEQUATE FOR OWN BUSINES S. HE FURTHER OBSERVED THAT THE QUESTION OF RUNNING ITS O WN VEHICLES I.T.A. NOS. 121 & 122/HYD/2012 M/S HYDERABAD AMMONIA & CHEMICALS PVT.LTD. 5 ON HIRE DOES NOT ARISE. FURTHER STATING THAT OCCASI ONAL LETTING OUT OF VEHICLES DOES NOT AMOUNT TO RUNNING THEM ON HIRE AND REFERRING TO THE DECISIONS OF HON'BLE SUPREME COURT IN CIT VS. GUPTA GLOBAL EXIM(P) LTD. 305 ITR 132 AND OF HON'BL E ITAT, VLSAKHAPATNAM, IN THE CASE OF SRIDEVI STEEL AND CEM ENT STORES VS. ITO (2008) 303 ITR (AT) 19, HE HELD THAT THE AS SESSEE IS ENTITLED TO DEPRECIATION ON OWN VEHICLES AT THE NOR MAL RATE ONLY. HE THUS, DISALLOWED THE EXCESS CLAIM OF DEPRECIATION OF RS.3,07,513/- ON THAT ACCOUNT, AND THUS, COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS.22,28,300/-, VID E HIS ORDER DATED.31.12.2009, PASSED U/S.143(3) R.W.S. 147 OF T HE ACT. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 4.1. DURING THE HEARING OF APPEAL, REFERRING TO THE STATEMENT OF FACTS AND GROUNDS OF APPEAL RAISED IN THIS CASE, THE LD. AR. SUBMITTED THAT THE ASSESSEE IS DOING BUSINESS OF TR ANSPORT FOR MORE THAN 15 YEARS. IT HAS PURCHASED ITS VEHICLES W HICH ARE MORE THAN 15 YEARS OLD AND THE SAME ARE USED FOR PU BLIC TRANSPORTATION IN IDLE TIME. REFERRING TO THE AMOUN TS SHOWN TOWARDS FREIGHT RECEIPTS DURING DIFFERENT YEARS, IT WAS SUBMITTED THAT THE SAME PROVED THAT THE COMPANY HAS EARNED NE T INCOME FROM OUTSIDE TRANSPORTATION BUSINESS. IT WAS FURTHE R SUBMITTED THAT THOSE VEHICLES ARE REGISTERED WITH RTO AS COMM ERCIAL VEHICLES AND ACCORDINGLY VEHICLE TAX WAS PAID. FURT HER STATING THAT THE AO WAS NOT CORRECT IN STATING THAT NONE OF THE VEHICLES WAS ACQUIRED DURING THE SPECIFIED PERIOD, IT WAS SU BMITTED THAT THREE VEHICLES BEARING NOS. AP 28T 1598, AP 28T 006 8 &. AP 09V 0203 WERE ACQUIRED PRIOR TO 1.1-98. FURTHER STA TING THAT THE COMPANY HAS PURCHASED COMMERCIAL VEHICLES AND THE S AME WERE USED FOR TRANSPORTATION BUSINESS, IT WAS SUBMI TTED THAT THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION @ 40% ON THE SAME. I.T.A. NOS. 121 & 122/HYD/2012 M/S HYDERABAD AMMONIA & CHEMICALS PVT.LTD. 6 4.2 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE, THE CIT(A) REJECTED THE GROUND OF THE ASSESSEE BY OBSER VING AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE ID. AR. AND THE FACTS OF THE CASE. AS PER SUCH SUBMISSI ONS, THE ASSESSEE IS DOING BUSINESS OF TRANSPORT AND HAS EARNED INCOME FROM HIRING OF VEHICLES. IT HAS BEEN FURTHER SUBMITTED THAT THE ASSESSEE HAS PURCHASED OWN VEHIC LES WHICH ARE USED FOR PUBLIC TRANSPORTATION IN IDLE TI ME. FROM SUCH VERY SUBMISSION MADE IN PARA 3 OF THE STATEMEN T OF FACTS, IT CLEARLY SHOWS THAT SUCH VEHICLES OWNED BY THE ASSESSEE, WERE USED OCCASIONALLY FOR TRANSPORTATION OF GOODS OF OTHERS DURING THE PREVIOUS YEAR. FROM SUCH SUBMISSION, IT FURTHER SHOWS THAT THOSE VEHICLES WE RE MAINLY USED FOR THE BUSINESS PURPOSE OF THE ASSESSE E COMPANY. THE PREDOMINANT USE OF SUCH VEHICLES BEING FOR OWN BUSINESS PURPOSE, DEPRECIATION IS ALLOWABLE ON THE SAME ONLY AT THE NORMAL RATE OF 25% AND NOT AT 40%, NOT WITHSTANDING THE PLEA OF THE ASSESSEE OF REGISTRATI ON OF THOSE VEHICLES AS COMMERCIAL VEHICLES AND DISCLOSUR E OF CERTAIN AMOUNTS FROM TRANSPORTATION CHARGES/FREIGHT DURING THE PREVIOUS YEAR 2004-05. 4.1. FURTHER FROM THE PROFIT AND LOSS ACCOUNT OF TH E ASSESSEE FILED FOR THIS ASSESSMENT YEAR, IT IS SEEN THAT, UNDER 'INCOME' SALES ARE SHOWN AT RS.5,79,10,051/- AND OTHER INCOME AT RS.15,69,827/-. THE ENTIRE SALES AR E FROM SALES OF DIFFERENT LIQUOR AMMONIA. FROM THE BREAK- UP OF SUCH OTHER INCOME, GIVEN UNDER SCHEDULE-12, IT IS S EEN THAT THE ASSESSEE HAS MEAGRE AMOUNT OF RS.13,000/- FROM FREIGHT COLLECTION. FROM THESE FACTS, IT CLEAR LY SHOWS THAT SUCH TANKERS/VEHICLES OWNED BY THE ASSESSEE, W ERE MAINLY USED FOR OWN' BUSINESS PURPOSE AND THE SAME WERE NOT MEANT FOR GIVING THEM ON HIRE FOR TRANSPOR TATION OF OTHERS. UNDER THESE CIRCUMSTANCES, THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION ON SUCH ASSETS ONLY AT THE NORMAL RATE OF 25%. IN THIS REGARD, RELIANCE IS PLACED ON THE SAID DECISIONS OF HON'BLE SUPREME COURT IN CIT VS. GUPTA GLOBAL EXIM (P) LTD.(SUPRA) AND OF HON'BLE ITAT, VISAKHAPATNAM IN THE CASE OF SRIDEVI STEEL AN CEMEN T STORES VS. ITO(SUPRA), REFERRED TO BY THE AO IN THE ASSESSMENT ORDER THEREFORE, THE AO WAS JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE FOR HIGHER DEPR ECIATION OF 40% ON SUCH VEHICLES, AND ALLOWING THE SAME ONLY AT 25% IN THIS CASE. HE, THUS, WAS JUSTIFIED IN MAKING THE SAID DISALLOWANCE OF RS.3,07,513/- THE ASSESSMENT ORDER. HENCE, THE SAID ADDITION MADE BY HIM IN THE ASSESSM ENT I.T.A. NOS. 121 & 122/HYD/2012 M/S HYDERABAD AMMONIA & CHEMICALS PVT.LTD. 7 ORDER IN THIS CASE IS CONFIRMED. THUS, THE GROUND O F APPEAL ON THE ABOVE ACCOUNT REJECTED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 6. BEFORE US, THE ASSESSEE HAS CANVASSED THAT THE I SSUE IN DISPUTE HAS BEEN SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF I CDS VS. CIT, 350 ITR 527 (SC) AND ALSO THE DECISION OF HONBLE D ELHI HIGH COURT IN THE CASE OF CIT VS. HB LEASING & FINANCE LTD., 3 60 ITR 362 (DEL.) 7. ON THE OTHER HAND, THE LEARNED DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES, PERUSED THE RECORD AND HAVE GONE THROUGH THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE DECISIONS CITED. THE HON BLE SUPREME COURT IN THE CASE OF ICDS VS. CIT (SUPRA) HELD AS F OLLOWS: HELD, AFFIRMING THE DECISION OF THE TRIBUNAL, (I) T HAT THE ASSESSEE WAS A LEASING COMPANY WHICH LEASED OUT THE TRUCKS THAT IT PURCHASED. THEREFORE, ON A COMBINED READING OF SECTION 2(13) AND (24) OF THE ACT THE INCOME DERIVE D FROM LEASING OF THE TRUCKS WOULD BE BUSINESS INCOME, OR INCOME DERIVED IN THE COURSE OF BUSINESS, AND HAD BEEN SO ASSESSED. HENCE, IT FULFILLED THE REQUIREMENT OF SECTION 32 O F THE ACT, THAT THE ASSET MUST BE USED IN THE COURSE OF BUSINE SS. THE ASSESSEE DID USE THE VEHICLES IN THE COURSE OF ITS LEASING BUSINESS. THE FACT THAT THE TRUCKS THEMSELVES WERE NOT USED BY THE ASSESSEE WAS IRRELEVANT FOR THE PURPOSE OF T HE SECTION. (II) THAT A SCRUTINY OF THE MATERIAL FACTS AT HAND RAISED A PRESUMPTION OF OWNERSHIP IN FAVOUR OF THE ASSESSEE. THE VEHICLE, ALONG WITH ITS KEYS, WAS DELIVERED TO THE ASSESSEE UPON WHICH, THE LEASE AGREEMENT WAS ENTERED INTO BY THE ASSESSEE WITH THE CUSTOMER. THE FACT THAT AT THE EN D OF THE LEASE PERIOD, THE OWNERSHIP OF THE VEHICLE WAS TRAN SFERRED TO THE LESSEE AT A NOMINAL VALUE DID NOT MAKE THE ASSE SSEE IN EFFECT A FINANCIER. NO INTERFERENCE COULD BE DRAWN FROM THE I.T.A. NOS. 121 & 122/HYD/2012 M/S HYDERABAD AMMONIA & CHEMICALS PVT.LTD. 8 REGISTRATION CERTIFICATE AS TO OWNERSHIP OF THE LEG AL TITLE OF THE VEHICLE. IF THE LESSEE WAS IN FACT THE OWNER, HE WO ULD HAVE CLAIMED DEPRECIATION ON THE VEHICLES, WHICH, AS SPE CIFICALLY RECORDED IN THE ORDER OF THE TRIBUNAL, WAS NOT THE CASE. (III) THAT THE ENTIRE LEASE RENT RECEIVED BY THE AS SESSEE WAS ASSESSED AS BUSINESS INCOME IN ITS HANDS AND THE EN TIRE LEASE RENT PAID BY THE LESSEE HAD BEEN TREATED AS D EDUCTIBLE REVENUE EXPENDITURE IN THE HANDS OF THE LESSEE. THI S REAFFIRMED THE POSITION THAT THE ASSESSEE WAS IN FA CT THE OWNER OF THE VEHICLE, IN SO FAR AS SECTION 32 OF TH E ACT IS CONCERNED. IV) THAT, THEREFORE, THE ASSESSEE WAS THE OWNER OF THE VEHICLES. AS THE OWNER, IT USED THE ASSETS IN THE C OURSE OF ITS BUSINESS, SATISFYING BOTH REQUIREMENTS OF SECTION 3 2 OF THE ACT AND, HENCE, WAS ENTITLED TO CLAIM DEPRECIATION IN RESPECT OF ADDITIONS MADE TO THE TRUCKS, WHICH WERE LEASED OUT. V) THAT FOR PURPOSES OF ASSESSEES CLAIM TO THE HIG HER RATE OF DEPRECIATION, THE INTERPRETATION OF THE TERM PURPO SES OF BUSINESS, USED IN THE SECOND PROVISO TO SECTION 32 (1) OF THE ACT WOULD NOT BE ANY DIFFERENT FROM THAT ASCRIBED T O IT U/S 32(1) OF THE ACT. THEREFORE, THE ASSESSEE FULFILLED EVEN THE REQUIREMENTS FOR A CLAIM OF A HIGHER RATE OF DEPREC IATION AND WAS ENTITLED THERETO. 8.1 IN THE CASE UNDER CONSIDERATION, THE ASSESSEE C LAIMED 40% DEPRECIATION ON THE TRUCKS/TANKERS OWNED AND USED B Y IT. THE AO DISALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION AND ALLOWED ONLY THE NORMAL RATE AS THE SAME ARE NOT RUN ON HIRE AND THE CIT(A) UPHELD THE ACTION OF THE AO. THE CONTENTION OF THE ASSESSE E IS THAT IT HAD USED THE TRUCKS/TANKERS FOR ITS OWN BUSINESS AND AL SO RUN THEM ON HIRE. AS PER THE RATIO LAID DOWN BY THE HONBLE SUP REME COURT IN THE CASE OF ICDS (SUPRA), THE ASSESSEE FULFILLED THE RE QUIREMENTS FOR A CLAIM OF A HIGHER RATE OF DEPRECIATION AND, THEREFO RE, WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND ALLOW THE ASSESSEES CLAIM OF 40% DEPRECIATION ON THE TRUCKS/TANKERS OWN ED AND USED BY THE ASSESSEE COMPANY. ACCORDINGLY, THE ADDITIONS M ADE BY THE AO OF RS. 3,07,513/- FOR AY 2005-06 AND RS. 5,31,340/- FOR AY 2007-08 AND CONFIRMED BY THE CIT(A) ARE HEREBY DELETED. I.T.A. NOS. 121 & 122/HYD/2012 M/S HYDERABAD AMMONIA & CHEMICALS PVT.LTD. 9 9. IN THE RESULT, BOTH THE APPEALS UNDER CONSIDERAT ION ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 23/01/2014. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 23/01/2014. KV COPY FORWARDED TO: 1. M/S HYDERABAD AMMONIA & CHEMICALS PVT. LTD., 18/ A, FEROZGUDA, HYDERABAD 500 011 2. DCIT, CIRCLE 2(2), HYDERABAD 3. CIT(A)-III, HYDERABAD 4. CIT-II, HYDERABAD. 5. THE DR, ITAT, HYDERABAD