INCOME TAX

Section 32 of the Income-tax Act, 1961--Rate of depreciation on motor lorries used in the business of transportation of goods--Regarding

Circular No. 652

Dated 14/6/1993

To

All Chief Commissioners of Income-tax/

All Directors-General of Income-tax.

Sir,

Under sub-item 2(ii) of Item No. III of Appendix I to the Income-tax Rules, 1962, higher rate of depreciation is admissible on motor buses, motor lorries and motor taxis used in a business of running them on hire. A question has been raised as to whether, for deriving the benefit of higher depreciation, motor lorries must be hired out to some other person or whether the user of the same in the assessee's business of transportation of goods on hire would suffice.

2. In Board's Circular No. 609, dated 29th July, 1991*, it was clarified that where a tour operator or travel agent uses motor buses or motor taxis owned by him in providing transportation services to tourists, higher rate of depreciation would be allowed on such vehicles. It is further clarified that higher depreciation will also be admissible on motor lorries used in the assessee's business of transportation of goods on hire. The higher rate of depreciation, however, will not apply if the motor buses, motor lorries, etc., are used in some other non-hiring business of the assessee.

3. This may be brought to the notice of all the officers in your charge.

Yours faithfully,

(Sd.) Ajay Kumar,

Under Secretary (ITA.II),

Central Board of Direct Taxes.