Penalty u/s 271(1)(c)

This query is : Resolved

Praveen (Querist)
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01 January 2012 Recently the AO has disallowd depreciation on Commercial Vehicle(CAR) used for business purpose eligible for depreciaiton @ 50% if purchased between 01.01.2009 to 30.09.2009, assessee had purchased in march 2009 and had claimed depreciation @ 50% for FY 2008-09 based on notification and also the notification no where stated that only half of depreciation will be allowed if used less than 180 days and also during the FY 2008-09 in survey assesse has declared income. Now is AO right in disallowing depreciation and is he right in initiating penalty proceedings on the above survey when the admitted income is declared and tax has been paid.

Mahesh Paryani

Mahesh Paryani (Expert)
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01 January 2012 Dear Praveen,

The notification states depreciation rate and not the methods of calculation.
calculation will be as per section 32

the definition of commercial vehicle is stated in notification please check the same

notification also states that it should be purchased and put to use, was that done?

please read the notification and state the exact cause of disallowance.

Regards

Praveen

Praveen (Querist)
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01 January 2012 its a LMV weighing less than 6000kgs and it was purchased and put to use in march 2009 itself. AO has allowed depreciation @ 7.5%. When it satisfies the definition of LMV which a part of the Definition for Commercial Vehicle depreciation should be allowed at rate allowed in notification.

“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)

“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;

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Mahesh Paryani

Mahesh Paryani (Expert)
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01 January 2012 This was an clearification provided to the notification does your vehicle fall under the does not include catagory?

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).”

Read more: Commercial Vehicle Acquired b/w 01.01.2009 to 31.03.2009 will be eligible to depreciation @ 50%

Mahesh Paryani

Mahesh Paryani (Expert)
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01 January 2012 Please refer to notification if any doubt.

http://taxguru.in/income-tax/commercial-vehicle-acquired-bw-01042009-to-31032009-will-be-eligible-to-depreciation-50.html

Praveen

Praveen (Querist)
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02 January 2012 Clarification and 'does not include' clause do not cover motor car, they cover maxi cab, motor cab, tractor and road roller and by going through the definition of Light motor Vehicle(LMV) it is very much clear that it includes motor car. hence Motor car is a commercial vehicle.

Mahesh Paryani

Mahesh Paryani (Expert)
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02 January 2012 “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 driver for hire or reward ;

Motor car is covered if it is not used for hire but used for businesses purpose.

Praveen

Praveen (Querist)
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02 January 2012 motor car is not used for hire but for business purpose only, then 50% depreciation is allowed. Correct Sir

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