DUNNIMA ENGINEERS & DIVERS ENTERPRISES PVT. LTD., NAVI MUMBAI V. ACIT - 15(1)(2), MUMBAI

ITA 6194/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0275 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 06-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 20-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PURUSHOTAM KUMAR
• Keywords: Depreciation; Earning of tax free income
• Section: 14A; 32; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE S/SHRI SANJAY GARG, JM AND SHRI RAJESH KUMA R , AM ./ I.T.A. NO. 6194 /MUM/201 6 ( / ASSESSMENT YEAR S : 20 12 - 13 ) DUNNIMA ENGINEERS AND DIVERS ENTERPRISES PVT LTD,D - 159, MIDC, NERUL, NAVI MUMBAI - 400706 / VS. ASSTT. COMMISSIONER OF INCOME TAX15(1)(2), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ./ PAN : AABCD0115D ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY MEHTA / RESPONDENT BY : SHRI PURUSHOTAM KUMAR / DATE OF HEARING : 6.6.2017 / DATE OF PRONOUNCEMENT : 14. 6.2017 / O R D E R PER RAJESH KUMAR , AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 18.8.2016 PASSED BY THE LD.CI T(A) - 24 , MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 20 12 - 13 . 2. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER : . BEING AGGRIEVED AGAINST ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 24 DATED 18.08.2016 PASSED BY COMMISSIONER OF INCOME TAX (APPE ALS) 24 THIS APPEAL PETITION IS BEING FILED TO CONSIDER THE ITA NO. 6194 / MUM/20 1 6 2 FOLLOWING GROUNDS OF APPEALS WHICH ARE INDEPENDENT OF AND WITHOUT PREJUDICE TO EACH OTHER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) 24 ERRED IN SENDING BACK THE MATTER TO VERIFY AS TO WHETHER ANY EXEMPT INCOME IS EARNED OR NOT, THOUGHT THE DETAILS IN RESPECT OF THE SAME WERE AVAILABLE BEFORE HIM. THE CIT(A) OUGHT TO HAVE DECIDED ON THE BASIS OF DETAILS AVAILABLE ON RECORD AND SHOUL D HAVE HELD DECIDED THE CASE AND DELETED THE ADDITIONS UNDER SECTION 14A OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE JUDGEMENTS AVAILABLE BEFORE HIM AND EARED IN NOT DELETING THE A DDITIONS UNDER SECTION 14A OF THE ACT AMOUNTING TO RS.2,88, 053/ - 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ADDITIONS MADE UNDER SECTION 14A OF THE ACT BE DELETED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, EARED NOT D ELETING THE ADDITION MADE UNDER SECTION 14A OF THE ACT AMOUNTING TO RS.2,88 ,053 TO THE COMPUTATION OF BOOK PROFIT UNDER SECTION 11SJB OF THE ACT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLO WING DEPRECIATION OF RS.3,16,22,682 THOUGH THE DEPRECIATION WAS RIGHTLY CLAIMED. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF DEPRECIATION OF RS.3, 16,22,682 CLAIMED ON MACHINERIES USED UNDER WATER AND FOR MINERAL OIL COMPANY, THOUGH THE SAID RATES ARE APPLICABLE TO THE APPELLANT COMPANY BEING CONTRACTOR TO THE MINERAL OIL COMPANY. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THA T THE MACHINERIES OF THE COMPANY ARE COVERED UNDER PART A, ITEM NO. III (8)(XII) OF DEPRECIATION SCHEDULE APPENDIX I AS PER RULE SAND HENCE ENTITLED TO DEPRECIATION @ 60% OF THE ASSETS. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARN ED CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT THE ITA NO. 6194 / MUM/20 1 6 3 DEPRECIATION IS ALLOWABLE @ 60% TO CONTRACTOR/SUB CONTRACTOR AS USAGE OF MACHINERIES IS TO BE CONSIDERED AND NOT WHO IS USING THE MACHINERIES. 3 . BRIEF FACTS OF THE CASE ARE THAT HE ASSESSEE FILED RE TURN OF INCOME ON 30.9.2012 DECLARING A TOTAL INCOME OF RS.3,74,91,630/ - WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . T HEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES UNDER SECTION 143(2), DATED 8.8.2013 AND U/S 142(1), DATED 22.8.2014 W ERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ENGINEERING AND DIVING SERVICES ON CONTRACT BASIS OR OTHERWISE . THE ISSUE RAISED IN THE GROUNDS OF APPEAL NO.1 TO 4 IS AGAINST THE SENDING THE ISSUE BACK TO THE FILE OF T HE AO TO VERIFY AS TO WHETHER THE ASSESSEE EARNED ANY EXEMPT INCOME WHEREAS THE ASSESSEE HAS GRIEVANCE ISSUED WAS NOT DECIDED. THE FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAS NOT RECEIVED DIVIDEND INCOME DURING THE YE A R WHICH IS EXEMPT AND ALS O NOT DISALLOWED ANY EXPENDITURE U/S 14A R.W.RUL E 8D OF THE INCOME TAX RULES, 1962 WHEREAS THE ASSESSEE HAS SHOWN INVESTMENT IN SHARES AT RS.1,28,06,000/ - . ACCORDING TO THE AO THE PROVISIONS OF SECTION 14A R.W.R.8D ARE ATTRACTED AND ACCORDINGLY CALCULATED THE DISALLOWANCE OF RS. 2,88,053/ - COMPRISING OF RS.2,49,785/ - UNDER RULE 8D(2)(II) AND RS.38,268/ - UNDER RULE 8(2)(III) OF THE RULES AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE MATTER CARR IED TO LD.CIT(A), ITA NO. 6194 / MUM/20 1 6 4 WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SENDING BACK THE ISSUE BACK TO THE FILE OF THE AO BY OBSERVING AND HOLDING AS UNDER : 2.4.2.2 HAVING WEIGHED THE PROS AND CONS, I FIND THAT LD. AO HAS NOT TAKEN INTO CONSIDERATION W HETHER ANY EXEMPT INCOME WAS EARNED BY THE APPELLANT OR WHETHER THE INVESTMENT WAS MADE WITH A STRATEGIC INVESTMENT VIEW POINT FURTHER, HE HAS ALSO NOT TAKEN INTO CONSIDERATION WHETHER THE APPELLANT HAD ITS OWN FUND FROM WHICH INVESTMENT COULD HAVE BEEN M ADE. MOREOVER, THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LIMITED IN ITA NO.249/2014 BY WHICH THE SPECIAL BENCH DECISION OF HON'BLE ITAT HAS BEEN OVERRULED HAS ALSO NOT BEEN TAKEN INTO CONSIDERATION AND THEREFORE,IN THE INTERES T OF JUSTICE, LD. AO IS DIRECTED TO VERIFY THE ABOVE FACTS AND EXAMINE IF THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LIMITED (SUPRA) IS APPLICABLE AND THEREAFTER, GRANT APPROPRIATE RELIEF. ACCORDINGLY, FOR STATISTICAL PURPOSES, GROU ND NO.2 TO 4 ARE PARTLY ALLOWED 4. THE LD. AR VEHEMENTLY SU BMITTED BEFORE US TH A T THE LD. CIT(A) HAS E R RED IN NOT DECIDING THE ISSUE ON THE BASIS OF FACTS AND LAW. THE LD. AR SUBMI TT ED THAT DURING THE YEAR T HE AS S E S S E E HAS NOT RECEIVED ANY INCOME BY WAY OF DIVIDEND AND THEREFORE THE DISALLOWANCE CALLED FOR U/S 14A R.W.R.8D NEED S TO BE DELETED . IN SUPPORT OF HIS CONTENTIONS, THE LD.AR RELIED ON THE PLETHORA OF JUDGMENTS AS UNDER : A. PR.C IT V. BALLARPUR INDUSTRIES LTD (I TA NO: 51 OF 2016) DATED 13.10.2 016 (BOMBAY HIGH COURT) (COPY ENCLOSED) B . M/S REDINGTON INDIA LTD V. ADDL. CIT [392 ITR 633 (MAD)] C . CHEMINVEST LTD. V. CIT [378 ITR 33 (DEL)/ 281 CTR 447 (DEL)] D . CIT V. SHIVAM MOTORS (P) LTD. [272 CTR 277 (ALL)] E. CIT V. CORRT ECH ENERGY (P) LTD. [272 CTR 262 (GUJ)] F. . LAKHANI MARKETING INCL. [272 CTR 265 (P&H)] G . HOLCIM INDIA (P) LTD. [272 CTR 282 (DEL)] H. CIT V/S WINSOME TEXTILE INDUSTRIES LTD. (319 ITR 204 P&H) I. CIT V/S D ELITE ENTERPRISES [ITA NO. 11 0 OF 2009 BOMBAY HIGH COURT) ITA NO. 6194 / MUM/20 1 6 5 5. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED ON THE ORDER OF FAA. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE IMPUGNED ORDERS AND CASE LAW CITED BY THE LD.AR. THE UNDIS PUTED FACTS BEFORE US THAT DURING THE YEAR, THE ASSESSEE HAS NOT RECEIVED ANY INCOME BY WAY OF DIVIDEND AND THEREFORE, THE SETTLED LEGAL POSITION IS THAT IN CASE THERE IS NO EXEMPT INCOME NO DISALLOWANCE U/S 14A R.W.R.8D COULD BE MADE. THE HONBLE HIGH COURT IN THE CASE OF BALLARPUR INDUSTRIES LTD (SUPRA) HAS OBSERVED AND HELD AS UNDER : ON HEARING THE LEARNED COUNSEL FOR THE DEPARTMENT AND ON A PERUSAL OF THE IMPUGNED ORDERS, IT APPEARS THAT BOTH THE AUTHORITIES HAVE RECORDED A CLEAR FINDING OF FACT THAT THERE WAS NO EXEMPT INCOME EARNED BY THE ASSESSEE. WHILE HOLDING SO, THE AUTHORITIES RELIED ON THE JUDGMENT OF THE DELHI HIGH COURT IN INCOME TAX APPEAL NO. 749 / 201 4 , WHICH HOLDS THAT THE EXPRESSION 'DOES NOT FORM PART OF THE TOTAL INCOME' IN SECTION 14A OF THE INCOME TAX ACT, 1961 ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF THE INCOME, WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR T HE PURPOSE OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. THE INCOME TAX APPELLATE TRIBUNAL HELD THAT THE PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT, 1961 WOULD NOT APPLY TO THE FACTS OF THIS CASE AS NO EXEMPT INCOME WAS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT ANY ACTUAL INCOME WAS RECEIVED BY THE ASSESSEE AND THE SAME WAS INCLUDIBLE IN THE TOTAL INCOME. IN THE FACTS OF THE CASE, THE AUTHORITIES HELD THAT SINCE THE INVESTMENTS MADE BY THE ASSESSEE IN THE SISTER CONCERNS WERE NOT. THE A CTUAL INCOME RECEIVED BY THE ASSESSEE, THEY COULD NOT HAVE BEEN INCLUDED IN THE TOTAL INCOME. ITA NO. 6194 / MUM/20 1 6 6 THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE RATIO DICENDIE IN THE ABOVE DECISION OF THE HONBLE HIGH COURT AND IN VIEW OF THAT WE DIRECT THE AO TO DE LETE THE DISALLOWANCE. 7. THE ISSUE RAISED IN GROUNDS OF APPEAL NO.5 TO 8 IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.3,16,22,862/ - ON THE MACHINES USED UNDER WATER IN CONNECTION MINERAL AND OIL FIELD EXPLORATION. 8. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED DEPRECIATION AT THE RATE OF 30% ON SATURATION SYSTEMS WHICH AS PER THE AO WAS NOT COVERED UNDER THE BLOCK OF ASSETS/ITEMS WHICH WERE ELIGIBLE FOR DEPRECIATION AT THE RATE OF 30% AS PER INCOME TAX RULE, 1962 THE ASSESSEE SUBMITT ED BEFORE THE AO VIDE LETTER DATED 16.3.2015 THAT THE DEPRECIATION WAS BEING CLAIMED AT THE RATE OF 30% SINCE LONG ON THE MACHINES WHICH ARE USED IN CONNECTION OF OFFSHORE ENGINEERING SERVICES AND UNDER WATER TECHNOLOGY INCLUDING , UNDER WATER CONSTRUCT ION, REPAIR, MAINTENANCE INCLUDING SATURATION DIVING, UNDER WATER WIELDING, INCLUDING HYPERBARIC TECHNIQUES. THE ASSESSEE WAS A CONTRACTOR/SUB - CONTRACTOR IN THE OILFILED OF ONGC DURING THE YEAR. THE ASSESSEE SUBMITTED THAT THE DEPRECIATION WAS CLAIM ED A T LOWER RATE AT 30% WHEREAS IT WAS ENTITLED TO CLAIM DEPRECIATION AT THE RATE OF 60% AS PER THE INCOME TAX RULES . THE AO, AFTER CONSIDERING THE SUBMISSIONS, CONTENTIONS AND DOCUMENTARY EVIDENCES FILED BY HE ASSESSEE CAME TO THE CONCLUSION THAT THE ASSES SEE ITA NO. 6194 / MUM/20 1 6 7 WA S NEITHER ENTITLED TO CLAIM DEPRECIATION AT THE RATE OF 30% NOR AT THE RATE OF 60% ON THE GROUND THAT THE ASSESSEE WAS NOT ENGAGED IN THE BUSINESS OF EXPLORATION OF OIL AND NATURAL GAS BUT WAS A CONTRACTOR /SUB - CONTRACTOR FOR CARRYING OUT THE WORK ON BEHALF OF THE OTHER COMPANIES WHO WERE ENGAGED IN THE BUSINESS OF EXPLORATION OF OIL AND NATURAL GAS AND MINERALS UNDER THE SEA AND FINALLY CONCLUDED THE ASSESSEE WA S ENTITLED AT THE NORMAL RATE OF DEPRECIATION AT THE RATE OF 15% AND ACCORDINGLY CALCUL ATED THE EXCESS DEPRECIATION AS CLAIMED BY THE ASSESSEE AT RS.3,16,22,682/ - AND ADDED THE SAME TO THE TOTAL . THE MATTER CARRIED BEFORE THE LD.CIT(A) WHO AFTER CONSIDERING THE VARIOUS CONTENTIONS OF THE ASSESSEE DISMISSED THE APPEAL OF THE ASSESSEE ON THIS ISSUE BY OBSERVING AND HOLDING AS UNDER : 2.4.4.2 HAVING CONSIDERED THE PROS AND CONS, I FIND THAT LD. AO HAD RIGHTLY REJECTED THE APPELLANT'S CLAIM OF HIGHER RATE OF DEPRECIATION AS THE SAID RATE IS APPLICABLE ONLY TO ELIGIBLE COMPANIES ENGAGED IN THE BU SINESS OF UNDER WATER EXPLORATION OF OIL AND NATURAL GAS AND OTHER RELATED PRODUCTS AND NOT TO THE CONTRACTORS AND SUB CONTRACTORS OF THE MAIN ASSESSEE. IN CASE OF OTHER ASSETS, THE RATE OF DEPRECIATION PROVIDED UNDER THE DEPRECIATION SCHEDULE IS ONLY 15% WHICH WAS ALLOWED BY THE LD. A O . IN THIS REGARD, THE CASE LAW CITED BY THE APPELLANT IN THE CASE OF GEARHERT INDIA LTD. (SUPRA) HAS BEEN PERUSED BUT IT IS SEEN THAT THE ABOVE DECISION WAS RENDERED BY DIRECTING THE LD. A O TO DETERMINE IF THE PLANT EQUIPMENT COULD BE TREATED IN THE NATURE OF PLANT USED IN THE MINERAL CONCERN WHICH HAS NOT BEEN DONE IN THE PRESENT CASE. IN ANY CASE, ON A PLAIN READING OF THE PROVISIONS OF THE DEPRECIATION SCHEDULE, IT IS APPARENT THAT HIGHER RATE OF DEPRECIATION IS AVAILABLE O NLY TO ASSESSEES ENGAGED IN THE BUSINESS OF UNDER WATER EXPLORATION OF OIL AND NATURAL GAS AND ADMITTEDLY, THE APPELLANT COMPANY IS NOT ENGAGED IN SUCH A BUSINESS. ACCORDINGLY, NOT FINDING ANY MERIT IN THE SUBMISSION OF THE APPELLANT, GROUND NOS. 6 TO 10 A RE DISMISSED. ITA NO. 6194 / MUM/20 1 6 8 9 . THE LD. AR SUBMITTED BEFORE US THAT THE ASSESSEE IS A SUB - CONTRACTOR/CONTRACTOR ENGAGED IN PROVIDING SERVICES BY USING PLANT AND MACHINERIES USED IN EXPLORATION OF NATURAL GAS AND OIL UNDER WATER. DURING THE YEAR THE ASSESSEE RENDERED S ERVICES TO VARIOUS COMPANIES INNTHE ONGC OIL FIELDS, THE DETAILS WHEREOF IS FILED AT PAGE 138 OF THE PAPER BOOK. THE LD. AR TOOK US THROUGH THE INCOME TAX RULES, 1962 WHICH PROVIDES THAT THE ASSESSEE WAS ENTITLED TO CLAIM DEPRECIATION AT THE RATE OF 60 % FO R THE INSTANT YEAR ACCORDING TO THE INCOME TAX RULES, 1962. THE LD. AR ARGUED THAT THE BELIEF OF THE AO THAT ONLY THOSE BUSINESS ES/ASSESSEES WERE ELIGIBLE TO CLAIM 6 0 % DEPRECIATION WHO WE RE ENGAGED IN THE BUSINESS OF MINERAL OIL AND NATURAL GAS EXPLOR ATION AND NOT THE ONES WHO WERE RENDERING CONTRACTUAL SERVICES. IN SUPPORT OF HIS CONTENTIONS, THE LD.AR RELIED ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT V/S HLS INDIA LTD (2011) 335 ITR 292 (DEL)ED RELIANCE UTILITIES LTD REPORTED IN 313 IT R 340 (BOM) AND THE DECISION OF DELHI TRIBUNAL IN THE CASE OF DCIT V/S GEARHERT INDIA LTD (1999) 64 TTJ(DEL) 63 . FINALLY, THE LD. AR PRAYED BEFORE THE BENCH THAT IN VIEW OF THE RATIO LAID DOWN IN THE AFORE SAID DECISION S , THE ASSESSEE HAS RIGHTLY OR EVE N CLAIMED DEPRECIATION AT LESSER THE RATE OF 30% THAN PROVIDED IN THE I.T. RULES AND THEREFORE DISALLOWANCE OF DEPRECIATION OF 3,16 ,22,682/ - SHOULD BE DELETED. 10 . PER CONTRA, THE LD. DR WHILE OBJECTING TO THE ARGUMENTS OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS A SUB - CONTRACTOR/CONTRACTOR OF ITA NO. 6194 / MUM/20 1 6 9 OTHER CONCERN WHO WAS ENGAGED IN THE BUSINESS PROVIDING SERVICES IN THE FIELD OF NATURAL GAS AND OIL EXPLORATION UNDER MARINES EXPLORATION UNDER THE DEEP SEA AND WAS NOT ITSELF ENGAGED IN THE BUSINESS OF PROVID ING DIRECT SERVICES TO THE ONGC. THE LD. DR ALSO REFERRED THE PROVIS IONS OF SECTION 32 OF THE ACT WHILE SUBMITTING THAT ONLY THOSE COMPANIES WHICH ARE ENGAGED IN PROVIDING SERVICES IN THE FIELD OF OIL AND NATURAL GAS EXPLORATION BY UASING THE PLANT AND MACHINERY WERE ENTITLED TO DEPRECIATION AT THE RATE OF 6 0% AND NOT OTHERWISE. THE LD.DR, SUBMITTED THAT IN THE INSTANT CASE, THE ASSESSEE ITSELF WAS NOT ENGAGED IN THE BUSINESS OF OIL AND NATURAL GAS EXPLORATION BUT CARRYING OUT THE JOB ON CONTRACT/SUB CONTRACT BASIS AND THEREFORE THE ASSESSEE WA S NOT ENTITLED TO CLAIM DEPRECIATION ON THE PLANT AND MACHINERY AS PROVIDED UNDER THE INCOME TAX RULES, 1962. FINALLY, THE LD. DR HEAVILY, REPLIED UPON THE ORDERS OF LOWER AUTHORITIES AND REQUESTED FOR UPHOLDIN G THE SAME. 11 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE IMPUGNED ORDER AND CASE LAW CITED BY THE ASSESSEE. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SUB - CONTRACTOR/CONTRA CTOR RENDERING THE JOB SERVICES UNDER THE MARINE AND USED MACHINES UNDER THE SEAWATER IN DEEP SEA FOR OIL AND NATURAL GAS EXPLORATION. THUS, IT IS CLEAR THAT THE ASSESSEE WAS NOT ITSELF ENGAGED IN THE ACTIVITY OF OIL AND MARINE EXPLORATION BUT WAS RENDERI NG THE JOB OF SERVICES TO THE OTHER COMPANIES WHICH WERE ENGAGED IN THE SAID BUSINESS. ITA NO. 6194 / MUM/20 1 6 10 NOW, THE ISSUE BEFORE US IS WHETHER THE MACHINERY AND EQUIPMENT OWNED BY THE ASSESSEE AND USED FOR THE SAID BUSINESS IN UNDER WATER IN CONNECTION WITH OIL AND NATURA L GAS EXPLORATION ARE ENTITLED TO CLAIM DEPRECIATION AT THE RATE AS ADMISSIBLE UNDER THE RULES AT 60 % SPECIFICALLY WHEN THE ASSESSEE RENDERING THE SERVICES TO OTHER ELIGIBLE COMPANIES. IN OUR VIEW, THE ASSESSEE WERE USING PLANT AND MACHINERY UNDER WATER IN CARRYING OUT THE CONTRACT WORK AND THEREFORE IT IS IMMATERIAL WHETHER THE ASSESSEE ITSELF IS ENGAGED IN THE SAID BUSINESS OR RENDERED SERVICES BY WAY OF CONTRACT OR OR SUB - CONTRACT OR TO OTHER ENTITIES WHO ARE ENGAGED IN THE SAID BUSINESS FOR CARRYING OU T EXPLORATION OF OIL AND NATURAL GAS IN DEEP SEA. IN OUR CONSIDERED VIEW, THE ASSESSEE IS ENTITLED TO DEPRECIATION AT THE RATE OF 60% ON THE SAID EQUIPMENTS AS PER THE PROVISIONS OF INCOME TAX RULES, 1962 ON THE GROUND THAT THE PLANT AND MACHINERY OF T HE ASSESSEE IS ACTUALLY BEING USED IN CONNECTION WITH OIL AND NATURAL GAS , MINERAL EXPLORATION AND IT IS IMMATERIAL WHETHER THE ASSESSEE CARRIED ON THE BUSINESS ITSELF OR THROUGH SOMEBODY ELSE WHO HAS CARRIED OUT THE BUSINESS AND ENGAGED ASSESSEES SERVI CES FOR THE SAME. THE CASE OF THE ASSESSEE FINDS SUPPORT FROM THE CASE OF GEARHERT INDIA LTD (SUPRA). IN THE SAID DECISION, THE CO - ORDINATE BENCH HAS HELD THAT THE DEPRECIATION ON THE PLANT AND MACHINERY WHICH MAY BE SUPPLIED BY SUB - CONTRACTOR/CONTRACTOR AND WHOSE SERVICES WERE TAKEN IN MINERAL, OIL AND NATURAL GAS EXPLORATION ARE ENTITLED FOR DEPRECIATION AS PROVIDED UNDER THE INCOME TAX RULES, 1962. ITA NO. 6194 / MUM/20 1 6 11 IN THE CASE OF CIT V/S HLS INDIA LTD (2011) 335 ITR 292 (THE DELHI) BENCH HAS OBSERVED AND HELD AS UNDE R : 51. DEPRECIATION ALLOWANCE IS A KIND OF TAX BENEFIT WHICH IS GIVEN TO THE BUSINESS CONCERNS FOR PROMOTION OF BUSINESS ACTIVITIES IN ANY PARTICULAR FIELD OF BUSINESS. IN THE INSTANT CASE DEPRECIATION IS ALLOWABLE TO MINERAL OIL CONCERNS AT THE RATE OF 100 PER CENT ON THE EQUIPMENTS USED BELOW THE EARTH SURFACE. IF THE SAME DEPRECIATION IS NOT ALLOWED TO OTHER BUSINESS CONCERNS ON THE GROUND THAT THE OWNER OF THESE EQUIPMENTS IS NOT A MINERAL OIL CONCERN BUT IT IS JUST PROVIDING AN ASSISTANCE OR LEASI NG THESE EQUIPMENTS TO A MINERAL OIL CONCERN THEN DEFINITELY THIS 'OTHER CONCERN' WILL CHARGE MORE FOR THESE SERVICES AND CONSEQUENTLY THE MINERAL OIL CONCERNS WILL BE COMMERCIALLY FORCED NOT TO OUTSOURCE WIRELINE LOGGING ACTIVITIES TO OTHER COMPANIES BUT TO DO IT THEMSELVES. HOWEVER, PRACTICALLY THIS IS NOT A VIABLE OPTION BECAUSE OIL COMPANIES ARE FACING IMMENSE PRESSURE TO INCREASE THE OUTPUT TO MEET THE ENERGY NEEDS OF OUR GROWING ECONOMY AND THIS HAS RESULTED IN EXTRA WORK LOAD. WE FIND THAT THE FACT S OF THE ASSESSEE CASE ARE SQUARELY COVERED BY THE ABOVEMENTIONED DECISION AND WE, THEREFORE, RESPEC TFULLY FOLLOWING THE RATIO IN THE ABOVE DECISION , SET ASIDE THE ORDER OF LD.CIT(A) AND ACCORDINGLY DIRECT THE AO TO DELETE THE DISALLOWANCE MADE ON ACCO UNT OF DEPRECIATION. 12. IN THE RESULT, THE APPEAL OF TH E ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH JUNE, 2017 . JUNE, 2017 SD SD ( / SANJAY GARG) ( / RAJESH KUMAR ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; D ATED 14 /06/ 201 7 . . ./ SRL , SR. PS ITA NO. 6194 / MUM/20 1 6 12 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, TRUE COPY / (DY./AS STT. REGISTRAR) , / ITAT, MUMBAI