How to declare income of "hydra" vehicle?
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
21 March 2012
Dear experts
A person having "Hydra" vehicle which is used in industrial manufacturing unit for lifting materials.
How to declare income of it? Does it will cover u/s 44AE?
Please advice....
A person having "Hydra" vehicle which is used in industrial manufacturing unit for lifting materials.
How to declare income of it? Does it will cover u/s 44AE?
Please advice....
23 March 2012
INCOME-TAX (THIRD AMENDMENT) RULES, 2009 –AMENDMENT IN NEW APPENDIX 1
NOTIFICATION NO. 10/2009, DATED 19-1-2009
In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—
1. (1) These rules may be called the Income-tax (ThirdAmendment) Rules, 2009
(2) They shall come into force on the 1st day of April, 2009.
2. In the Income-tax Rules, 1962, in the Table to New Appendix 1, in Part-A relating to TANGIBLE ASSETS, under the heading III. MACHINERY AND PLANT, in item (3), after sub-item (vi) and entries relating thereto, the following shall be inserted, namely:—
“(via) New commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession [See paragraph 6 of the Notes below this Table] 50”.
Income Tax – 50% Depreciation for New Motor Vehicles
The CBDT has amended the Table to the New Appendix-I prescribing the Rates at which depreciation is admissible. Now new commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession , will get 50% depreciation.
• “Commercial vehicle” means
• “heavy goods vehicle”,
• “heavy passenger motor vehicle”,
• “light motor vehicle”,
• “medium goods vehicle” and
• “medium passenger motor vehicle”
but does not include
• “maxi-cab”,
• “motor-cab”,
• “tractor ” and “road-roller”.
The expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “road-roller” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).
And the Motor Vehicles Act defines these as,
• “heavy goods vehicle” means any goods carriage the gross vehicle weight of which, or a tractor or a road – roller the unladen weight of either of which, exceeds 12,000 kilograms;
• “heavy passenger motor vehicle” means any public service vehicle or private service vehicle or educational institution bus or omnibus the gross vehicle weight of any of which, or a motor car the unladen weight of which, exceeds 12,000 kilograms;
• “light motor vehicle” means a transport vehicle or omnibus the gross vehicle weight of either of which or a motor car or tractor or road – roller the unladen weight of any of which, does not exceed 6,000 kilograms;
• “medium goods vehicle” means any goods carriage other than a light motor vehicle or a heavy goods vehicle;
• “medium passenger motor vehicle” means any public service vehicle or private service vehicle, or educational institution bus other than a motor cycle, invalid carriage, light motor vehicle or heavy passenger motor vehicle;
• ” maxicab ” means any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward;
• “motorcab” means any motor vehicle constructed or adapted to carry not more than six passengers excluding the driving for hire or reward;
• “tractor” means a motor vehicle which is not itself constructed to carry any load (other than equipment used for the purpose of propulsion); but excludes a road – roller;
• And the Act does not define Road-roller.
FURTHER CLARIFICATION ON ABOVE
There has been an increase in depreciation for commercial vehicles from 40 per cent to 50 per cent. Such depreciation is available both for business and profession. Would it mean that the assessees engaged in professions such as law, medicine and audit would be eligible for 50 per cent deduction for depreciation for cars used for profession? Commercial vehicle should ordinarily mean any vehicle used for the purpose of commerce which will include profession. But “commercial vehicle” is understood in the Notes to the Depreciation Schedule as under:
“6. “Commercial vehicle” means “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle” and “medium passenger motor vehicle” but does not include “maxi-cab”, “motor-cab”, “tractor” and “road-roller”. The expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “road-roller” shall have the meanings respectively assigned to them in Sec. 2 of the Motor Vehicles Act, 1988 (59 of 1988).”
The above definition would include light vehicles as well. In fact, passenger cars used by the tourism industry should qualify as commercial vehicles, when they are licensed as public transport.
Notwithstanding such persuasive arguments, one has to bear in mind the classification in the Appendix prescribed under Rule 5 in pursuance of Sec. 32(1) for purposes of understanding the entry. Entries under Item III of Part A of the Appendix are relevant in this context. Entry 2 for which the prescribed rate is 15 per cent reads as under:
“(2) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after April 1, 1990.”
Entry 3(ii) for which the prescribed rate of depreciation is 30 per cent reads as under:
“(ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire.” It may, therefore, be seen that motor cars qualify for depreciation at 20 per cent unless run on hire to merit depreciation at 30 per cent. Entry 3(via) as now inserted by the Income-tax (Third Amendment) Rules, 2009, reads: “(via) New commercial vehicle which is acquired on or after January 1, 2009, but before April 1, 2009, and is put to use before April 1, 2009, for purposes of business or profession, [See paragraph 6 of the Notes below this Table]”.
In the light of the definition of commercial vehicles reproduced earlier and reading the entries harmoniously, it would mean that commercial vehicles referred are other than cars falling under Entry 2 and 3(ii). The amendment to the rule is obviously intended to cover only trucks and other heavy vehicles, besides other commercial vehicles hitherto entitled to depreciation at 30 per cent.
From the above definition when road roller is not covered how hydra vehicle can be treated as commercial vehicle. Moreover, the Hydra vehicle is leased out or working under contract but it is for loading and not for transportation on commercial basis so it is not covered in the head commercial vehicles any how you can claim as commercial vehicle till the ITO gives his opinion.
NOTIFICATION NO. 10/2009, DATED 19-1-2009
In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—
1. (1) These rules may be called the Income-tax (ThirdAmendment) Rules, 2009
(2) They shall come into force on the 1st day of April, 2009.
2. In the Income-tax Rules, 1962, in the Table to New Appendix 1, in Part-A relating to TANGIBLE ASSETS, under the heading III. MACHINERY AND PLANT, in item (3), after sub-item (vi) and entries relating thereto, the following shall be inserted, namely:—
“(via) New commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession [See paragraph 6 of the Notes below this Table] 50”.
Income Tax – 50% Depreciation for New Motor Vehicles
The CBDT has amended the Table to the New Appendix-I prescribing the Rates at which depreciation is admissible. Now new commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession , will get 50% depreciation.
• “Commercial vehicle” means
• “heavy goods vehicle”,
• “heavy passenger motor vehicle”,
• “light motor vehicle”,
• “medium goods vehicle” and
• “medium passenger motor vehicle”
but does not include
• “maxi-cab”,
• “motor-cab”,
• “tractor ” and “road-roller”.
The expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “road-roller” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).
And the Motor Vehicles Act defines these as,
• “heavy goods vehicle” means any goods carriage the gross vehicle weight of which, or a tractor or a road – roller the unladen weight of either of which, exceeds 12,000 kilograms;
• “heavy passenger motor vehicle” means any public service vehicle or private service vehicle or educational institution bus or omnibus the gross vehicle weight of any of which, or a motor car the unladen weight of which, exceeds 12,000 kilograms;
• “light motor vehicle” means a transport vehicle or omnibus the gross vehicle weight of either of which or a motor car or tractor or road – roller the unladen weight of any of which, does not exceed 6,000 kilograms;
• “medium goods vehicle” means any goods carriage other than a light motor vehicle or a heavy goods vehicle;
• “medium passenger motor vehicle” means any public service vehicle or private service vehicle, or educational institution bus other than a motor cycle, invalid carriage, light motor vehicle or heavy passenger motor vehicle;
• ” maxicab ” means any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward;
• “motorcab” means any motor vehicle constructed or adapted to carry not more than six passengers excluding the driving for hire or reward;
• “tractor” means a motor vehicle which is not itself constructed to carry any load (other than equipment used for the purpose of propulsion); but excludes a road – roller;
• And the Act does not define Road-roller.
FURTHER CLARIFICATION ON ABOVE
There has been an increase in depreciation for commercial vehicles from 40 per cent to 50 per cent. Such depreciation is available both for business and profession. Would it mean that the assessees engaged in professions such as law, medicine and audit would be eligible for 50 per cent deduction for depreciation for cars used for profession? Commercial vehicle should ordinarily mean any vehicle used for the purpose of commerce which will include profession. But “commercial vehicle” is understood in the Notes to the Depreciation Schedule as under:
“6. “Commercial vehicle” means “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle” and “medium passenger motor vehicle” but does not include “maxi-cab”, “motor-cab”, “tractor” and “road-roller”. The expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “road-roller” shall have the meanings respectively assigned to them in Sec. 2 of the Motor Vehicles Act, 1988 (59 of 1988).”
The above definition would include light vehicles as well. In fact, passenger cars used by the tourism industry should qualify as commercial vehicles, when they are licensed as public transport.
Notwithstanding such persuasive arguments, one has to bear in mind the classification in the Appendix prescribed under Rule 5 in pursuance of Sec. 32(1) for purposes of understanding the entry. Entries under Item III of Part A of the Appendix are relevant in this context. Entry 2 for which the prescribed rate is 15 per cent reads as under:
“(2) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after April 1, 1990.”
Entry 3(ii) for which the prescribed rate of depreciation is 30 per cent reads as under:
“(ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire.” It may, therefore, be seen that motor cars qualify for depreciation at 20 per cent unless run on hire to merit depreciation at 30 per cent. Entry 3(via) as now inserted by the Income-tax (Third Amendment) Rules, 2009, reads: “(via) New commercial vehicle which is acquired on or after January 1, 2009, but before April 1, 2009, and is put to use before April 1, 2009, for purposes of business or profession, [See paragraph 6 of the Notes below this Table]”.
In the light of the definition of commercial vehicles reproduced earlier and reading the entries harmoniously, it would mean that commercial vehicles referred are other than cars falling under Entry 2 and 3(ii). The amendment to the rule is obviously intended to cover only trucks and other heavy vehicles, besides other commercial vehicles hitherto entitled to depreciation at 30 per cent.
From the above definition when road roller is not covered how hydra vehicle can be treated as commercial vehicle. Moreover, the Hydra vehicle is leased out or working under contract but it is for loading and not for transportation on commercial basis so it is not covered in the head commercial vehicles any how you can claim as commercial vehicle till the ITO gives his opinion.
Querist : Anonymous
Querist :
Anonymous
(Querist)
23 March 2012
Thanks Mr. S.S Agrawal for a very long clarification.
But sir i have asked how to declare income of hydra vehicle. I have also mentioned that it is used in industrial unit for lifting materials.
So please clarify on this matter too.
Thanks for spending valuable time of march 2012.
Regards
But sir i have asked how to declare income of hydra vehicle. I have also mentioned that it is used in industrial unit for lifting materials.
So please clarify on this matter too.
Thanks for spending valuable time of march 2012.
Regards
28 July 2024
Declaring income from a "Hydra" vehicle, which is used in an industrial manufacturing unit for lifting materials, involves understanding how this asset is treated for tax purposes under Indian Income Tax law.
### **1. Classification and Declaration:**
**A. **Nature of Income:**
- **Income from Business or Profession:** If the Hydra vehicle is used in a business or industrial unit, the income derived from its operation would typically be considered as income from business or profession.
**B. **Tax Treatment under Income Tax Act:**
1. **Section 44AE:**
- Section 44AE pertains to the taxation of income from the business of plying, hiring, or leasing goods carriages. This section is applicable for vehicles like trucks or lorries that are used for the transport of goods.
- **Hydra vehicles** (often used for material handling) do not fall under this category, as they are not primarily used for transporting goods on public roads. Therefore, **Section 44AE is not applicable** to Hydra vehicles.
2. **Section 44AD:**
- If the business of the Hydra vehicle is carried out by a resident individual, Hindu Undivided Family (HUF), or a partnership firm (other than LLP), Section 44AD can be applicable if the gross receipts are below the specified threshold.
- Under Section 44AD, income is declared as a percentage of the gross receipts. However, it typically applies to businesses like trading or manufacturing and not specifically to the use of machinery like Hydra.
### **2. **Declaring Income:**
1. **Income from Business:**
- Since the Hydra vehicle is used in an industrial unit, any income or profit earned from its operation should be declared as part of the business income in the business income section of the Income Tax Return (ITR).
- This includes declaring any charges or fees received for the usage of the vehicle within the manufacturing unit.
2. **Depreciation:**
- The Hydra vehicle is considered a plant and machinery. As such, it will be eligible for depreciation under Section 32 of the Income Tax Act.
- You can claim depreciation on the Hydra vehicle based on the applicable rates for plant and machinery.
3. **Maintenance and Operational Costs:**
- You can also deduct maintenance and operational expenses related to the Hydra vehicle from the income it generates. This would include fuel, repairs, insurance, and other operational costs.
4. **Filing the Return:**
- **For Individuals and Partnership Firms:** Use ITR-3 or ITR-4, depending on whether you maintain books of accounts or opt for presumptive taxation.
- **For Companies:** Use ITR-6.
### **3. **Steps to Declare Income:**
1. **Compute Gross Receipts:**
- Calculate the total receipts or income derived from the operation of the Hydra vehicle.
2. **Calculate Depreciation:**
- Apply the relevant depreciation rates for plant and machinery.
3. **Deduct Expenses:**
- Deduct all allowable expenses related to the operation and maintenance of the Hydra vehicle.
4. **Prepare the ITR:**
- Fill out the applicable ITR form and declare the net income (after deducting depreciation and expenses) in the business income section.
5. **File the Return:**
- Ensure all income and expenses related to the Hydra vehicle are accurately reported and file the return before the due date.
### **4. **Additional Considerations:**
- **Record Keeping:** Maintain detailed records of all income, expenses, and depreciation related to the Hydra vehicle.
- **Professional Advice:** Consult a tax professional or accountant to ensure compliance and accurate filing, especially if your case involves complex issues or large amounts.
By following these steps, you can correctly declare the income and expenses related to the Hydra vehicle used in your industrial manufacturing unit.
### **1. Classification and Declaration:**
**A. **Nature of Income:**
- **Income from Business or Profession:** If the Hydra vehicle is used in a business or industrial unit, the income derived from its operation would typically be considered as income from business or profession.
**B. **Tax Treatment under Income Tax Act:**
1. **Section 44AE:**
- Section 44AE pertains to the taxation of income from the business of plying, hiring, or leasing goods carriages. This section is applicable for vehicles like trucks or lorries that are used for the transport of goods.
- **Hydra vehicles** (often used for material handling) do not fall under this category, as they are not primarily used for transporting goods on public roads. Therefore, **Section 44AE is not applicable** to Hydra vehicles.
2. **Section 44AD:**
- If the business of the Hydra vehicle is carried out by a resident individual, Hindu Undivided Family (HUF), or a partnership firm (other than LLP), Section 44AD can be applicable if the gross receipts are below the specified threshold.
- Under Section 44AD, income is declared as a percentage of the gross receipts. However, it typically applies to businesses like trading or manufacturing and not specifically to the use of machinery like Hydra.
### **2. **Declaring Income:**
1. **Income from Business:**
- Since the Hydra vehicle is used in an industrial unit, any income or profit earned from its operation should be declared as part of the business income in the business income section of the Income Tax Return (ITR).
- This includes declaring any charges or fees received for the usage of the vehicle within the manufacturing unit.
2. **Depreciation:**
- The Hydra vehicle is considered a plant and machinery. As such, it will be eligible for depreciation under Section 32 of the Income Tax Act.
- You can claim depreciation on the Hydra vehicle based on the applicable rates for plant and machinery.
3. **Maintenance and Operational Costs:**
- You can also deduct maintenance and operational expenses related to the Hydra vehicle from the income it generates. This would include fuel, repairs, insurance, and other operational costs.
4. **Filing the Return:**
- **For Individuals and Partnership Firms:** Use ITR-3 or ITR-4, depending on whether you maintain books of accounts or opt for presumptive taxation.
- **For Companies:** Use ITR-6.
### **3. **Steps to Declare Income:**
1. **Compute Gross Receipts:**
- Calculate the total receipts or income derived from the operation of the Hydra vehicle.
2. **Calculate Depreciation:**
- Apply the relevant depreciation rates for plant and machinery.
3. **Deduct Expenses:**
- Deduct all allowable expenses related to the operation and maintenance of the Hydra vehicle.
4. **Prepare the ITR:**
- Fill out the applicable ITR form and declare the net income (after deducting depreciation and expenses) in the business income section.
5. **File the Return:**
- Ensure all income and expenses related to the Hydra vehicle are accurately reported and file the return before the due date.
### **4. **Additional Considerations:**
- **Record Keeping:** Maintain detailed records of all income, expenses, and depreciation related to the Hydra vehicle.
- **Professional Advice:** Consult a tax professional or accountant to ensure compliance and accurate filing, especially if your case involves complex issues or large amounts.
By following these steps, you can correctly declare the income and expenses related to the Hydra vehicle used in your industrial manufacturing unit.
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