1985 (2) TMI 112 - AT - Income Tax

Summary

Issues:
Entitlement to depreciation at 30% on rigs and compressors mounted on a lorry used for drilling borewells.

Analysis:
The appeal before the ITAT Madras-C revolved around the question of whether the assessee was entitled to claim depreciation at 30% on the rigs and compressors mounted on a lorry utilized for drilling borewells. The assessee-firm, engaged in the business of drilling borewells, had claimed this depreciation during the assessment proceedings for the year 1978-79. The Income Tax Officer (ITO) initially rejected this claim, but on appeal, the Appellate Authority Commissioner (AAC) allowed the depreciation based on precedents set by the Tribunal in similar cases. The department, aggrieved by the AAC's decision, filed the present appeal challenging the allowance of depreciation at 30% on the rigs and compressors.

Upon reviewing the facts and arguments presented by both parties, the ITAT found no merit in the department's appeal. The ITAT noted that the AAC's decision was consistent with the Tribunal's previous rulings in cases such as Popular Borewell Service, Bharat Rig Service, O.P. Palaniappan, Tiruchengode Borewell Service, and others. The Tribunal emphasized the importance of maintaining consistency in decisions to uphold institutional integrity and avoid conflicting judgments on similar issues. Citing precedents like CIT v. S. Devaraj and CIT v. L.G. Ramamurthi, the Tribunal underscored the need for adherence to established views to prevent confusion and unnecessary litigation.

The department's representative referenced a decision by the Third Member in the case of ITO v. Sivam & Co., arguing against the allowance of depreciation at 30% for the rigs and compressors. However, the ITAT clarified that the Third Member's decision in the mentioned case did not pertain to the issue of depreciation on rigs and compressors mounted on a lorry for borewell drilling. The Third Member's ruling focused on investment allowance under a different section of the Income-tax Act, not the depreciation claim in question. The ITAT emphasized that the Third Member's observations were not binding on the current matter and should not alter the consistent stance taken by the Tribunal in similar cases.

Based on the detailed analysis and consideration of the arguments presented, the ITAT upheld the AAC's order allowing depreciation at 30% on the rigs and compressors. The ITAT concluded the judgment by dismissing the department's appeal, affirming the decision in favor of the assessee regarding the depreciation claim for the assessment year in question.