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TMI Blog1991 (3) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings, the assessee maintained that it was entitled to depreciation at 30%, which however, was not accepted by the Income-tax Officer, who limited the rate of allowable depreciation to 10%, as against 30%, originally claimed and allowed. On appeal by the assessee, the Appellate Assistant Commissioner confirmed the allowance of depreciation at 10% against 30% claimed by the assessee, following his earlier order in I. T. A. No. 254/76-77 passed in respect of the same assessee for the assessment year 1971-72, which forms the subject-matter of the second question referred in T. C. No. 1391 of 1980. On further appeal by the assessee before the Tribunal, it purported to follow its earlier decision in I. T. A. No. 1096/Mad/77-78, which again is the subject-matter of the second question referred in T. C. No. 1391 of 1980, to hold that the assessee is entitled to depreciation on the machinery at the rate of 30%, under item III-D(4) in the table of rates of admissible depreciation, occurring in Part of Appendix I to the Income-tax Rules, 1962 (hereinafter referred to as "the Rules"). Under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), at the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions of law have been referred to this court, for its opinion : " ( 1 ) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that, as per the provisions of section 47 of the Indian Registration Act, the title over the property transferred by Neyveli Lignite Corporation Ltd. passed on to the assessee on November 1, 1970, and not on the date of registration in 1975 and, accordingly, the assessee was entitled to depreciation ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the drilling machines used by the assessee should be treated as earth-moving machinery, falling under entry 4 of item III-D of Part I of Appendix I of the Income-tax Rules, 1962, and, therefore, entitled to depreciation at 30 % ? " We now proceed to consider the first question referred in T. C. No. 1391 of 1980. We find from para 2 of the order of the Tribunal that it had upheld the claim of the assessee for depreciation on building on the strength of an order of the Tribunal in I. T. A. No. 998/Mds/76-77 (C. Bench) in the assessee's case in respect of the assessment year 1973-74. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted therein. It would be appropriate at this stage to make a reference to the relevant entry, which reads as follows : "III. D.-(4) Earth moving machinery employed in heavy construction works, such as dams, tunnels, canals, etc. (N. E. S. A.)" From the words occurring in the aforesaid entry, it is seen that the words employed not only describe the machinery as "earth-moving machinery", but also clearly indicate the nature of the user of the "earthmoving machinery" as those used or employed in heavy construction works such as dams, tunnels, canals. Any machinery employed for removing earth from a place, be it on the surface of the earth or by burrowing hole into the bowels of the earth, would fall within the expression "earthmoving machinery". That, however, is not the only requirement to be fulfilled in order to fall within the entry. What has been further contemplated is earth-moving machinery of the kind used or employed in the excavation of earth in large quantities and on a massive scale, as is necessary in the case of construction of works like dams, tunnels, canals, etc. To interpret the entry as taking in not only "earth-moving machinery" for purposes of excavating earth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been used only for the purpose of digging borewells, it follows that though, in sense, the drilling machinery may be called "earth-moving machinery", such machinery cannot be regarded as of such a nature as employed in heavy construction works, as contemplated by the entry. A brief reference to the reasoning of the Tribunal to conclude that the machinery in this case would fall within entry III-D(4) may now be made. In T. C. No. 1391 of 1980, the Tribunal, in the course of its order, had given three reasons to hold that the drilling machinery would fall within the entry extracted earlier. The first is that the machinery was built by the heavy machine-building plant of the Heavy Engineering Corporation Ltd., Ranchi. The fact that the machinery had been fabricated by the Heavy Engineering Corporation Ltd. has no relevance whatever in considering the question whether the drilling machinery of the assessee would fall within the entry. We fail to see how the fabrication of the drilling machinery by the Heavy Engineering Corporation Ltd. would make the machinery "earth-moving machinery employed in heavy construction works", as found in the entry. The second reason is that the machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess or any one or more of those processes. The Appellate Tribunal did not accept the contention that though "calendering" might be a "process", it is not any "process" that satisfies the requirement of "any other process" occurring in section 2(f)(v) of the Central Excises Act, and that only those processes that partake of the same common characteristic of and belong to the same genus as the processes such as bleaching, mercerising, dyeing, printing, water-proofing, rubberising, shrink-proofing or organdie-processing occurring in section 2(f)(v) were alone contemplated and held that it was unnecessary for the process of "calendering" to be a "process" belonging to the same genus as those enumerated in section 2(f)(v) of the Central Excises Act to take the cotton fabric out of the exemption and even if the process did not partake of the characteristic of other processes specifically enumerated, the cotton fabric would be taken out of the exemption. This interpretation of the Tribunal was found to be faulty and erroneous by the Supreme Court and it was pointed out that the words "any other process" in section 2(f)(v) of the Central Excises Act, though they otherwise had wide import, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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