COMMISSIONER OF INCOME TAX V. H.M.T.CONSTRUCTION CO.

ITR/164/1989

AI Insights

The case revolves around the classification of dumpers used by H.M.T. Construction Co. in their road construction business for tax depreciation purposes. The Income-tax Officer initially allowed a 30% depreciation rate, but the Commissioner of Income-tax later contested this, arguing that dumpers should be classified under 'road making plant and machinery', eligible only for a 15% depreciation rate. The Appellate Tribunal reversed the Commissioner's decision, supporting the assessee's classification of dumpers as 'earth moving machinery', which qualifies for 30% depreciation. The High Court upheld the Tribunal's decision, referencing a similar case, Shiv Construction Co. vs. CIT, which had established a precedent for such classification.

• Counselvise Citation: [2002] 140 COUNSELVISE.COM (IT) 718271 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 03-07-2002
• Assessment Year: misc
• Other Referred Cases: Shiv Construction Co. vs. Commissioner of Income-tax, M/s. Hindustan Construction Company ITA No.1515 to 1517/Ahd/1986
• Laws Referred To: Income Tax Act, I.T. Rules, 1962
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: MONA BHATT
• Keywords: Appellate Tribunal; Commissioner of Income Tax; Depreciation; Dumpers; Road Construction; Earth moving machinery
• Section: 263

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 164 of 1989 For Approval and Signature: Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE K.A.PUJ ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO @ COMMISSIONER OF INCOME TAX Versus H.M.T.CONSTRUCTION CO. -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 164 of 1989 MRS MONA BHATT for Petitioner No. 1 SERVED BY RPAD - (N) for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE K.A.PUJ Date of decision: 03/07/2002 ORAL JUDGEMENT (Per : MR.JUSTICE K.A.PUJ) At the instance of the Revenue, the following question of law is referred to this Court for its opinion:- \"Whether, the assessee is entitled to depreciation at the rate of 30% on the Dumpers employed in its business of road construction?\" 2. The Income-tax Officer in the course of assessment proceedings allowed depreciation at the rate of 30% to the assessee. 3. The Commissioner of Income-tax initiated proceedings under section 263 of the I.T. Act on the ground that the order passed by the I.T.O. was erroneous in so far as it was prejudicial to the interest of the revenue. According to the Commissioner of Income-tax the Dumpers were covered in \"Road making plant and machinery\" appearing at item No.III B(14) of Appendix I Part I of Rule 5 of the I.T. Rules, 1962 and depreciation was available at the rate of 15% only. The assessee contended that Dumpers came under the classification of \"earth moving machinery\" covered by item III D(4) of the Appendix. The Commissioner of Income-tax turned down the objections raised by the assessee and directed the ITO to allow depreciation at the rate of 15%. 4. The Appellate Tribunal relying on its earlier decision in the case of M/s. Hindustan Construction Company ITA No.1515 to 1517/Ahd/1986 held that Dumpers would be entitled to depreciation at the rate of 30%. The Appellate Tribunal, therefore, set aside the order made by the Commissioner of Income-tax under section 263 and restored the order made by the I.T.O.. 5. We have heard Mrs. Mona Bhatt, learned Standing Counsel appearing for the revenue. No one appears on behalf of the respondent though notice was duly served. 6. At the time of hearing of this Reference, our attention is drawn to the decision of this Court in the case of Shiv Construction Co. vs. Commissioner of Income-tax (1987) 165 ITR 160 wherein this Court has confirmed the view taken by the Tribunal that dumpers were machinery or tools used for the business of the assessee and that for that reason, the assessee cannot be denied the claim of depreciation at the rate of 30% on the ground that the dumpers were road transport vehicles. 7. Since the facts of the present case are identical with the facts of the case of Shiv Construction Co. vs. CIT (supra) and no distinguishing feature has been pointed out, we are of the view that the assessee is entitled to depreciation at the rate of 30% on the dumpers employed in the business of road construction. 8. We, therefore, answer the question referred to us in the affirmative i.e. in favour of the assessee and against the revenue. 9. The Reference is accordingly disposed of with no order as to costs. (M.S. Shah,J) (K.A. Puj,J) zgs/- "