Circular No. 315

240. Motor vans - Rate of depreciation prescribed in Part I of Appendix I to Income-tax Rules

What this is

Circular No. 315 was issued by the Central Board of Direct Taxes on 24 September 1981. Its subject is 240. Motor vans - Rate of depreciation prescribed in Part I of Appendix I to Income-tax Rules.

What it does

Fixes the depreciation rate for motor vans, for which Appendix I to the Income-tax Rules provided no rate of its own. Taking the view that a motor van is closer to a motor lorry or a motor bus than to a motor car, the Board directs that depreciation on motor vans be allowed at the rate applicable to motor lorries and motor buses, being 30 per cent under item No. III(ii)-D(9) of Appendix I.

Why it was issued

No specific rate had been prescribed for motor vans and the Board had to say which entry they fall in.

Who it reaches

Businesses owning motor vans
Assessing Officers allowing depreciation at the motor car rate on vans
Transport and delivery businesses

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

240. Motor vans - Rate of depreciation prescribed in Part I of Appendix I to Income-tax Rules
1. The Board had an occasion to consider the rate at which depreciation should be allowed in respect of "Motor vans" as no specific rate has been provided for them under Appendix I to the Income-tax Rules, 1962.
2. The Board consider that as "Motor vans" are more akin to "Motor lorries" and "Motor buses" than to "Motor cars", depreciation on "Motor vans" may be allowed at the rate applicable to "Motor lorries" and "Motor buses" which is 30 per cent as per item No. III (ii)-D(9) of Appendix I.
Circular : No. 315 [F. No. 202/89/79-IT(A-II)], dated 24-9-1981.

What to watch

The whole point is the classification: the van goes with lorries and buses, not with cars, and that is what changes the rate.
The 30 per cent figure is the rate in the entry as it then stood; the rate for that entry has to be taken from the Appendix as it applies to the year in hand.
The circular fixes the rate and says nothing about the higher rate available in the Appendix for vehicles run on hire, which stands on its own terms.

Where you meet it

In a scrutiny where depreciation claimed on a delivery van at the lorry rate is scaled down to the motor car rate.

← Circular No. 316 · Circular No. 314 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.