Tribunal allows additional depreciation for quarry crane under Income-tax Act

The Tribunal ruled in favor of the assessee, determining that the mobile crane used in quarrying granite blocks qualifies for additional depreciation under the Income-tax Act, 1961. The Tribunal held that the crane, despite its capability to lift and move weights, retains its essential character as machinery used in mining operations and not as a road transport vehicle. Additionally, the lessor of the machinery was found eligible for investment allowance based on legal precedent, entitling the assessee to costs amounting to Rs.2,000.

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Issues Involved:
The judgment addresses the issue of whether a mobile crane qualifies for additional depreciation under section 32(1)(iia), proviso (b), of the Income-tax Act, 1961. Additionally, it considers whether the lessor of the machinery is entitled to investment allowance.

Depreciation Claim for Mobile Crane:
The Revenue argued that the mobile crane, used in quarrying granite blocks, does not qualify for additional depreciation as it is considered a road transport vehicle. The assessee claimed depreciation under the proviso which allows deduction for machinery or plant whose entire cost is deducted in computing income. The mobile crane, despite being capable of lifting and moving weights, retains its essential character as machinery used in mining operations. Its usage in the quarry, not on public roads, for moving granite blocks crucial for mining operations supports its classification as machinery, not a road transport vehicle. The Tribunal correctly ruled that the mobile crane is machinery, not a road transport vehicle, rejecting the Revenue's argument as unfounded.

Entitlement to Investment Allowance:
Another issue raised was whether the lessor of the machinery is eligible for investment allowance. The judgment references the apex court's decision in CIT v. Shaan Finance (P.) Ltd. [1998] 231 ITR 308, which favored the lessor's entitlement to investment allowance. Both questions were resolved in favor of the assessee, entitling them to costs amounting to Rs.2,000.

This judgment clarifies the distinction between machinery used in specific operations, such as mining, and road transport vehicles, emphasizing the purpose and functionality of the equipment in determining its classification for tax benefits. The decision provides clarity on the eligibility of lessors for investment allowance based on established legal precedent.

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