Depreciation @ 40% on vehicles used for running on hire is allowable even in absence of separate agreement with various parties to whom such vehicles are let out on hire:

AO denied depreciation at higher rate i.e. 40% on vehicles since he was of the view that the said vehicles were not used for running them on hire and the same was confirmed by CIT(A). On appeal, Hon’ble ITAT observed that the assessee had claimed depreciation @ 40% on trucks and JCBs used for running the same on hire. Assessee had furnished ledger of “Carting income” in respect of income earned on various trips made by it and complete details such as name and addresses of parties to whom such vehicles were given on hire, details of trips and rate at which income was earned had been furnished. Hon’ble ITAT was of the view that since the vehicles were given to various parties on trip basis, separate agreement for carting income for each trip with each party is practically not possible. In light of the above, depreciation at higher rate i.e. 40% on such vehicles was allowed.

[M/s. Tirupati Construction Co. vs. ACIT – IT(SS)A Nos.178 to 182/Ahd/2009 & 73 to 75/Ahd/2009]