Facts of the Case

  1. The assessee owned trucks which were leased out for commercial operations.
  2. The assessee claimed depreciation at the higher rate of 40% on such trucks.
  3. The Revenue disputed the claim and argued that only normal depreciation at the rate of 25% was admissible.
  4. The matter reached the Delhi High Court in appeal.
  5. The Court noted that the controversy had already been conclusively decided in favour of the assessee by the earlier judgment in CIT v. Bansal Credits Ltd. (2003) 259 ITR 69.

Issues Involved

  1. Whether trucks leased out by the assessee qualify for higher depreciation at the rate of 40% under the Income-tax Act and the applicable depreciation schedule?
  2. Whether the Revenue was justified in restricting depreciation to the normal rate of 25% on leased trucks?

Petitioner’s (Revenue’s) Arguments

  • The Revenue contended that trucks leased out by the assessee were entitled only to normal depreciation.
  • According to the Revenue, depreciation should be restricted to 25% and the higher rate of 40% was not available to the assessee.

Respondent’s (Assessee’s) Arguments

  • The assessee claimed depreciation at the higher rate of 40% in respect of trucks leased out for commercial use.
  • Reliance was placed on the legal position already recognized by the Delhi High Court in CIT v. Bansal Credits Ltd. (2003) 259 ITR 69, which held that higher depreciation was allowable in such circumstances.

Court Findings

  • The Delhi High Court observed that the issue stood concluded by its earlier judgment in CIT v. Bansal Credits Ltd. (2003) 259 ITR 69.
  • The Court held that the controversy regarding higher depreciation on leased trucks had already been settled in favour of the assessee.
  • Since the precedent directly governed the issue, no further consideration was required.

Court Order

  • The appeal filed by the Revenue was dismissed.
  • The claim of higher depreciation at the rate of 40% on trucks leased out by the assessee was upheld in accordance with the decision in CIT v. Bansal Credits Ltd. (2003) 259 ITR 69.

Important Clarification

  • Ownership of commercial vehicles coupled with leasing/hiring activities can qualify an assessee for higher depreciation where the vehicles are used in the business of running them on hire.
  • The Delhi High Court reaffirmed that the legal principle laid down in CIT v. Bansal Credits Ltd. (2003) 259 ITR 69 continues to govern such depreciation claims.
  • The judgment reinforces the principle that settled precedents should be followed where the issue is identical and no distinguishing facts exist.

Relevant Sections Involved

  • Section 32 of the Income-tax Act, 1961 – Depreciation
  • Depreciation Rules applicable to motor lorries used in the business of running them on hire

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2008:DHC:12459-DB/BDA31072008ITA8252008_103554.pdf

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