Depreciation rate for drilling rig and compressor raised a referable question of law on schedule entry interpretation.

A referable question of law arose on the correct rate of depreciation for rig and compressor machinery used in bore-well drilling. The assessee claimed depreciation at 30%, while the Assessing Officer restricted it to 15%. The appellate authority restored the higher rate by treating the equipment as covered by the relevant depreciation schedule entry, and the Tribunal affirmed that view. The HC held that the dispute turned on interpretation of the depreciation entry and its application to rig and compressor mounted on a lorry for drilling operations, and therefore a question of law did arise. The reference application was allowed.

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Issues: Whether a referable question of law arose on the rate of depreciation allowable on rig and compressor used in drilling bore-wells.

Analysis: The assessee had been granted depreciation at 30% on rig and compressor machinery, but the Assessing Officer later restricted the allowance to 15%. The appellate authority restored the higher rate by relying on the depreciation schedule in the Rules and treating the machinery as covered by the relevant appendix entry. The Tribunal affirmed that view. The Court held that the controversy raised a referable question of law, particularly on the correct interpretation of the relevant depreciation entry and its application to rig and compressor mounted on a lorry for bore-well drilling.

Conclusion: A question of law was found to arise and the reference application was allowed.

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