1996 (1) TMI 83 - HC - Income Tax

Summary

Issues:
1. Interpretation of depreciation rates for pay loader machine under Income-tax Rules, 1962.
2. Eligibility of pay loader for additional depreciation under section 32(1)(iia).
3. Classification of pay loader as earth-moving machinery for depreciation purposes.

Analysis:
The case involved a reference application under section 256(2) of the Income-tax Act, 1961, regarding the depreciation rates for a pay loader machine. The respondent-assessee purchased a terex pay loader and claimed depreciation at 30%, which was challenged by the Commissioner of Income-tax. The Commissioner directed depreciation at 10%, but the Commissioner of Income-tax (Appeals) allowed depreciation at 30%. The Tribunal upheld the 30% depreciation for the pay loader. The Revenue contended that the pay loader did not qualify for depreciation under clause III(D)(8) of Appendix-I of the Income-tax Rules, as it was used for coal collection and transportation. The High Court analyzed the Appendix and concluded that the pay loader, being used for earth-moving activities, fell under the category of earth-moving machinery, justifying the 30% depreciation rate.

Regarding the eligibility of the pay loader for additional depreciation under section 32(1)(iia), the Tribunal remanded the matter for reconsideration by the Income-tax Officer. The High Court did not delve into this aspect as it was already under review. The Court affirmed the Tribunal's decision on the pay loader's classification as earth-moving machinery and its entitlement to 30% depreciation, dismissing the need for a reference. The judgment highlighted the specific use of the pay loader for earth-moving activities, aligning with the classification under the Income-tax Rules.

In conclusion, the High Court rejected the reference application, upholding the Tribunal's decision on the depreciation rate for the pay loader machine. The judgment emphasized the machine's use in earth-moving operations, aligning with the classification under clause III(D)(8) of Appendix-I. The Court did not find any legal question involved in the Tribunal's decision, affirming the entitlement of the pay loader to 30% depreciation based on its functionality as earth-moving machinery.