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TMI Blog1988 (9) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... eous and prejudicial to the interests of revenue inasmuch as the ITO had allowed depreciation at the rate of 30 per cent on "dumpers" being used by the assessee in its business of construction of roads. The learned CIT was of the opinion that depreciation on dumpers was available at the rate of 15 per cent only under Item III-B(14) of Appendix I, Part 1 of Rule 5 and not under Item III-D(4) of the said Appendix. He, therefore, invoked his jurisdiction under section 263 of the Act and issued a combined show-cause notice to the assessee indicating his intention to pass suitable orders with a view to modify the orders of the ITO. 3. In response to the show-cause notice, the assessee furnished written submissions wherein it was contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s order, according to him, was set aside by the CIT vide order dated 22-4-1983 passed u/s 263 and that also on the question of investment allowance on the dumpers. According to the learned counsel, no attempt was made to disturb the figure of depreciation already allowed by the ITO at 30 per cent. It was further submitted that consequent to the order u/s 263, the ITO once again reframed the assessment and that also after obtaining the necessary instructions of the IAC u/s 144B. The claim of investment allowance, according to him, was once again allowed by the ITO, acting under the directions of the IAC, and depreciation at 30 per cent on dumpers was once again allowed. It was submitted that it was this second order of the ITO dated 27-4-198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d circular and come to the conclusion that the dumpers were being used by the assessee as "earth-moving machinery". 8. At this stage we would reproduce the relevant portions of the observations of the IAC in 144B proceedings and to which a specific reference was made by the assessee's counsel. They are as under :-- "I have considered the facts of the case, the submissions and the contentions of the assessee's counsel. I find it as a matter of fact that the assessee uses the dumpers for the purpose of construction of roads as earth-moving machinery only. . . ." "Further considering the normal purposes for which dumpers are used they cannot be described as 'road transport vehicles' in spite of the fact that they may be required to be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers u/s 263 over and over again in respect of the same assessment year and at each occasion in respect of a different item. It was accordingly submitted that although on merits the assessee's claim was maintainable, even on the question of jurisdiction the order of the CIT deserve to be set aside. Before concluding his arguments, the assessee's counsel invited our attention to a circular dated 11-10-1985 issued by the Ministry of Industry and Company Affairs wherein dumpers had been classified as "earth-moving machinery". He finally made an impassioned plea for the acceptance of the assessee's claim on merits. 10. The learned departmental representative in the course of his arguments strongly supported the consolidated order of the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Item III-B(14) of the said Appendix. At this stage it would be necessary to reproduce the relevant entry viz. Item III-D(4) of Appendix I, Part 1 : "(4) Earth-moving machinery employed in heavy construction works, such as dams, tunnels, canals, etc." According to us the aforesaid description is only illustrative and not exhaustive since the word used is "etc.". We are also of the view that as far as earth-moving work is concerned it would be the same, whether the construction is that of a road, canal, dam or a tunnel. It would be the same dumper that would have to be used for this type of work although in some cases the earth-moving work may be more rigorous and tougher than in other cases. This, however, would not mean that dumpers b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entrepreneurs are requested to note the above mentioned changes." 14. A perusal of the aforesaid circular clearly shows that 'dumpers' have been classified as "earth-moving machinery". 15. In the final analysis, we would hold that the 'dumpers' being used by the assessee in road construction work would be entitled to depreciation at the rate of 30 per cent. We accordingly set aside the consolidated order of the CIT for all the three years under consideration and restore those of the ITO. 16. Before we part with these appeals, we would like to observe that action u/s 263 should be taken after a proper perusal of the records in respect of all the items which are sought to be encompassed within the said action. It would not be desirable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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