1987 (5) TMI 86 - AT - Income Tax

Summary

Issues:
1. Whether tippers used in construction projects can be considered as Road Transport Vehicles for the purpose of investment allowance.

Detailed Analysis:

The judgment by the Appellate Tribunal ITAT Hyderabad-B involved the issue of whether tippers used in construction projects could be classified as Road Transport Vehicles for the purpose of investment allowance. The assessee, a registered firm engaged in contract work, used tippers to transport earth within project sites. The Income-tax Officer initially denied investment allowance, stating that the assessee was not manufacturing goods. However, the Tribunal ruled in favor of the assessee, leading to an appeal where the Commissioner (Appeals) agreed with the Income-tax Officer's view that tippers were Road Transport Vehicles, hence ineligible for investment allowance.

The assessee argued that tippers should not be classified as Road Transport Vehicles, likening them to dumpers. They referenced a Calcutta High Court case and a circular from the Central Board of Direct Taxes to support their claim. The Tribunal analyzed Section 32A, which allows investment allowance for assets used in business, and the proviso excluding office appliances and Road Transport Vehicles. They emphasized that the term "Road Transport Vehicles" should be understood in a commercial context, not technically, citing a Gujarat High Court decision on a similar matter.

Applying tests from the Gujarat High Court case, the Tribunal concluded that tippers did not meet the criteria to be considered Road Transport Vehicles. They also examined the Income-tax Rules and classifications related to machinery used in heavy construction works, supporting their finding that tippers fell under a different category than traditional Road Transport Vehicles like buses and lorries. The Tribunal agreed with the Commissioner (Appeals) on rejecting the relevance of the Road Transport Corporation Act in this context and allowed the appeals, ruling in favor of the assessee's entitlement to investment allowance.