Rajasthan H.C : Whether, on the facts and in the circumstances of the case and considering the fact that in the case quoted by the Tribunal, i.e., CIT vs. Popular Borewell Services & Ors. (1991) 94 CTR (Mad) 240 : (1992) 194 ITR 12 (Mad) : TC 27R.434, the Madras High Court had held that depreciation of 30 per cent was not allowable on rig and compressor used in drilling borewell, the Tribunal was justified in holding that depreciation @ 30 per cent was allowable on rig and compressor used in drilling borewells ?

High Court Of Rajasthan

CIT vs. National Boring Co.

Section 256(2)

N.N. Mathur & Harbans Lal, JJ.

IT Ref. Appeal No. 20 of 1999

10th January, 2002

Counsel Appeared : Sundeep Bhandawat, for the Petitioner : L.M. Lodha, for the Respondent

JUDGMENT

BY THE COURT :

This is a reference application under s. 256(2) at the instance of the Revenue, seeking reference of the following question for the opinion of this Court. “Whether, on the facts and in the circumstances of the case and considering the fact that in the case quoted by the Tribunal, i.e., CIT vs. Popular Borewell Services & Ors. (1991) 94 CTR (Mad) 240 : (1992) 194 ITR 12 (Mad) : TC 27R.434, the Madras High Court had held that depreciation of 30 per cent was not allowable on rig and compressor used in drilling borewell, the Tribunal was justified in holding that depreciation @ 30 per cent was allowable on rig and compressor used in drilling borewells ?” The respondentassessee claimed depreciation @ 30 per cent on the rig and compressor machines which was granted by the AO. However, later on AO rectified the order and reduced the depreciation benefit to 15 per cent only. The CIT(A) allowed the claim of the assessee and restored 30 per cent after referring to the depreciation schedule provided in the Rules. The CIT(A) held that item No. 7(D) of 3 Appendix I covered the rig and compressor. The Tribunal relying on a decision of the Madras High Court reported in (1991) 94 CTR (Mad) 240 : (1992) 194 ITR 12 (Mad) : TC 27R.434 affirmed the order of the CIT(A).

It is contended by Mr. L.M. Lodha learned counsel appearing for the Revenue that the judgment of the Madras High Court in CIT vs. Popular Borewell (1991) 94 CTR (Mad) 240 : (1992) 194 ITR 12 (Mad) : TC 27R.434 has not been correctly interpreted by the Tribunal. The Madras High Court held that merely because the rig and compressor are mounted on a lorry to facilitate their easy and convenient transport from one place to another, it cannot be said that the rig and compressor either constitute integral parts of a lorry by themselves or can appropriately called or known as “lorry”. It is submitted that the rig and compressor used for borewells mounted on a lorry cannot be held to fall under the category of motor-lorry occurring in Entry No. III(ii) D(a) of Part I of the Appendix I of the IT Rules, 1962. We are satisfied that a referable question of law arises from the order of Tribunal. Consequently we direct the Tribunal Jaipur Bench to state the statement of fact and refer the question of law referred above for the opinion of this Court.

[Citation : 258 ITR 734]

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