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TMI Blog1988 (2) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... n rig and compressor used in boring of wells in accordance with entry D(4) of the Depreciation Schedule under the Income-tax Rules, 1962 ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in holding that the assessee-firm which carries on business in drilling borewells, is an industrial undertaking engaged in manufacturing or producing articles or things and is entitled to relief under section 32A of the Income-tax Act ?" The assessee is a partnership firm carrying on business in drilling borewells (tube-wells). For the purpose of drilling borewells, the assessee, inter alia, used a rig and compressor of the value of Rs. 3,77,965. The assessee claimed that it is entitled to depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Income-tax Officer and carried the matter to, the Commissioner of Income-tax (Appeals). The learned Commissioner agreed with the view of the Income-tax Officer and dismissed the appeal. Thereupon a second appeal was filed by the assessee before the Income-tax Appellate Tribunal and it reiterated its claim for depreciation at 30%. The Tribunal considered the matter at considerable length and held the view that although the rig used by the assessee for drilling borewells does not answer the description against item D(7), it answers the description against item D(4) which is in the following terms: "(4) Earth-moving machinery employed in heavy construction works, such as dams, tunnels, canals, etc. (No extra shift allowance)." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee answered the description contained in item D(4) and, consequently, depreciation ought to be allowed at 30%. The Tribunal had also gone through the brochures and extracts from certain magazines to show that a rig is considered in trade circles as drilling equipment for construction work. Pictures of this equipment along with the details of the work done were scrutinised by the Tribunal before it recorded its satisfaction that the equipment squarely fell under item D(4). Having carefully examined the information on which the Tribunal acted, we feel that the question is, indeed, one of fact and no legal considerations would prevail. The Tribunal had occasion to go through the scientific and technical literature concerning the dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to claim depreciation at 30%. We accordingly answer question No. (1) in the affirmative, i.e., in favour of the assessee and against the Revenue. The second question concerns the investment allowance under section 32A of the Act. There is no dispute that investment allowance is allowable under section 32A in respect of plant and machinery owned by the assessee and wholly used for the purpose of business carried on by the assessee provided the machinery or plant is new and is installed after March 31, 1976. The further requirement is that the machinery or plant should be installed in an industrial undertaking for the purpose of business of construction, manufacture or production of any article or thing, not being an article or th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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