Law:

Section:

Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/rate of - Whether liquefied petroleum cylinder mounted on chassis of a truck for all purposes is a gas cylinder including valves and regulators as defined in Appendix-I Part - III (ii) F4 of rule 5 of Income-tax Rules, 1962 and is eligible for 100 per cent depreciation - Held, yes [In favour of assessee] FACTS Assessee-firm was a dealer in liquefied petroleum gas of Hindustan Petroleum Corporation of India. The LP gas cylinders were fitted to the chassis of transport vehicles. For the purpose of claiming depreciation, the assessee treated the entire item as consisting of two parts, i.e. , cylinder/tanker, chassis and cabin. As per the Appendix I of the Income-tax Rules, 1962, the depreciation allowable under section 32 for gas cylinders including valves and regulators is 100 per cent, whereas for transport vehicle, it was 40 per cent at the relevant time. Assessee therefore, claimed depreciation for gas cylinders including valves and regulators at 100 per cent instead of 40 per cent for transport vehicle. The Assessing Officer held that the assessee was entitled to depreciation at rate of 40 per cent only on the premise that the vehicle on which the cylinder was mounted was registered with transport authority as a transport vehicle. On appeal, the Commissioner (Appeals) confirmed the order of the Assessing Officer. On the second appeal, the Tribunal, however, set aside the order of Commissioner (Appeals) and allowed the assessee's appeal. On the revenue's appeal : HELD In the instant case, the container mounted on the chasis of the truck is nothing but a gas cylinder and it fits in the description of the gas cylinder mentioned in Appendix-I Part - III (ii) F4 of rule 5 of the Income-tax Rules, 1962. As the description makes it clear, gas cylinder includes valves and regulators. The mere fact that the container is mounted on the chassis of the truck does not deprive it of the character of the gas cylinder. It has all the attributes of the cylinder and it will not be divested of its basic character as cylinder on account of the fact that the item is registered as a transport vehicle. The basic…

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