1992 (10) TMI 147 - AT - Income Tax

Summary

Issues:
- Whether the assessee, a registered firm engaged in Government contract business, is entitled to additional depreciation and investment allowance on trucks, dumpers, tippers, and road roller.

Analysis:
The appeals before the Appellate Tribunal ITAT Pune involved the common issue of whether the assessee, a registered firm engaged in Government contract business, is entitled to additional depreciation and investment allowance on specified vehicles. The assessee executed contracts for the construction of dams and canals, following the mercantile method of accounting. The dispute pertained to the assessment years 1982-83, 1983-84, and 1984-85. The CIT(A) had allowed the assessee's claim for additional depreciation and investment allowance, citing judgments of various High Courts. The Revenue appealed, arguing that the CIT(A) erred in granting these benefits.

The Revenue heavily relied on the judgment of the Bombay High Court in Shah Construction Co. Ltd. vs. CIT, which held that certain vehicles were not eligible for development rebate. The Departmental Representative contended that the vehicles in question were road transport vehicles and, therefore, not eligible for investment allowance. However, the assessee's counsel cited judgments from different High Courts, emphasizing that vehicles used for construction work were entitled to investment allowance. The counsel also highlighted the functional test laid down by the Board to determine eligibility for development rebate.

The Tribunal analyzed the conflicting judgments and factual circumstances. It noted the findings of the Bombay High Court regarding the nature of the vehicles and the functional test for determining road transport vehicles. After considering the registration certificates and usage of the vehicles, the Tribunal concluded that the vehicles in question were not road transport vehicles and were used exclusively at the work site. Consequently, the Tribunal upheld the decision of the CIT(A) to grant investment allowance and additional depreciation on the specified vehicles. The Tribunal dismissed the appeals, affirming the allowance of benefits to the assessee.

In conclusion, the Tribunal's decision revolved around the interpretation of relevant legal principles, including the definition of road transport vehicles and the eligibility criteria for investment allowance. By analyzing the facts and legal precedents, the Tribunal upheld the assessee's entitlement to additional depreciation and investment allowance on the specified vehicles used for construction work.