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Issues Involved:
1. Investment Allowance under Section 32A of the IT Act, 1961. 2. Deletion of Addition Representing Customs Duty for Computers Taken on Hire. 3. Depreciation Rate for Down Hole Equipment. Issue-wise Detailed Analysis: Issue 1: Investment Allowance under Section 32A of the IT Act, 1961 The primary issue here is whether the assessee qualifies as an industrial company eligible for investment allowance under Section 32A of the IT Act, 1961. The assessee claimed investment allowance on new plant and machinery costing Rs. 3,42,78,573, asserting it is an industrial undertaking engaged in producing data essential for oil exploration. The AO rejected this claim, likening the assessee's activity to mere data processing, not manufacturing. However, the CIT(A) allowed the claim, relying on judicial precedents which classified data processing as an industrial activity. The Tribunal upheld CIT(A)'s decision, agreeing that the assessee's high-tech operations in oil exploration qualify it as an industrial undertaking, thus entitling it to investment allowance. Issue 2: Deletion of Addition Representing Customs Duty for Computers Taken on Hire The Revenue challenged the deletion of Rs. 3,06,559 representing customs duty for computers taken on hire, arguing that the assessee was not the owner of the computers and the hire charges were high. The AO disallowed the deduction, but the CIT(A) deleted this disallowance, noting that the customs duty was part of a package deal for hiring the computer for four years, with the duty being adjusted against the hire charges. The Tribunal upheld the CIT(A)'s decision, finding no merit in Revenue's contention and affirming that the hire charges, including customs duty, were reasonable and justifiable. Issue 3: Depreciation Rate for Down Hole Equipment The core question here is whether the assessee qualifies as a mineral oil concern eligible for 100% depreciation on down hole equipment under Rule 5 of the IT Rules, 1962. The AO denied 100% depreciation, asserting that the assessee is not a mineral oil concern but merely assists in oil exploration. The CIT(A) reversed this, holding that the assessee's operations are integral to oil exploration, thus qualifying it for 100% depreciation. The Tribunal, however, found it necessary to ascertain the exact nature and use of the equipment. It directed the AO to reexamine whether the equipment is used in a manner similar to those in mineral oil concerns, and if so, to allow 100% depreciation. The Tribunal noted that if the equipment is mobile and not permanently fixed, normal depreciation should apply. Conclusion: The Tribunal upheld the CIT(A)'s decision on the investment allowance and deletion of customs duty addition but remanded the issue of depreciation rate for further examination. The appeals were partly allowed.
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