Revision under Section 263 and depreciation on mounted rigs were both decided against the assessee, favouring the Revenue.

An assessment may be revised under section 263 of the Income-tax Act where it is both erroneous and prejudicial to the interests of the Revenue; the Madras HC note states that this condition was satisfied, so the revisionary order was upheld. On depreciation, rigs and compressors mounted on a motor lorry for borewell digging were treated as separate equipment and not as an integral part of the vehicle; the higher 30% rate was declined and depreciation was limited to 10%. The stated result is that both issues were decided against the assessee and in favour of the Revenue.

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Issues: (i) whether the Commissioner's exercise of revisionary power under section 263 of the Income-tax Act was justified in setting aside the assessment; (ii) whether rigs mounted on lorries used for borewell digging were entitled to depreciation at 30 per cent.

Issue (i): whether the Commissioner's exercise of revisionary power under section 263 of the Income-tax Act was justified in setting aside the assessment.

Analysis: The assessment was held to be both erroneous and prejudicial to the interests of the Revenue, bringing it within the scope of the Commissioner's revisional jurisdiction under section 263.

Conclusion: The revision under section 263 was valid and the finding was in favour of the Revenue.

Issue (ii): whether rigs mounted on lorries used for borewell digging were entitled to depreciation at 30 per cent.

Analysis: The rigs and compressors fitted on the motor lorry were held not to form an integral part of the lorry, and the applicable depreciation was confined to the rate recognised by the Court for such equipment, not the higher rate claimed.

Conclusion: Depreciation at 30 per cent was not allowable and the assessee was entitled only to depreciation at 10 per cent, in favour of the Revenue.

Final Conclusion: Both questions were answered against the assessee, sustaining the revisional order and limiting depreciation on the mounted rigs to the lower permissible rate.

Ratio Decidendi: Where an assessment is erroneous and prejudicial to the interests of the Revenue, revision under section 263 is sustainable; and equipment mounted on a motor vehicle is not automatically treated as part of the vehicle for claiming a higher depreciation rate.

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