Tractors used in agricultural operations qualify for depreciation and investment allowance because they are not transport vehicles.

A tractor used in agricultural operations was treated as eligible machinery, because it is a motor vehicle but not a transport vehicle. Following the earlier Division Bench view, the Court held that this characterisation did not exclude tractors from the statutory benefits claimed. On that basis, tractors used as agricultural machinery qualified for additional depreciation, and the same reasoning supported investment allowance on tractors and related agricultural machinery. The reference was therefore answered in favour of the assessee on both questions.

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Issues: (i) Whether tractors used as agricultural machinery were entitled to additional depreciation. (ii) Whether tractors and agricultural machinery used as agricultural machinery were entitled to investment allowance.

Issue (i): Whether tractors used as agricultural machinery were entitled to additional depreciation.

Analysis: The Court followed the earlier Division Bench view that a tractor is not a road transport vehicle. It falls within the definition of motor vehicle as a tractor, but not within the definition of transport vehicle, and the earlier reasoning supported eligibility for the allowance claimed.

Conclusion: The Tribunal was in holding that tractors used as agricultural machinery were entitled to additional depreciation.

Issue (ii): Whether tractors and agricultural machinery used as agricultural machinery were entitled to investment allowance.

Analysis: The Court adopted the same earlier view and held that tractors used in agricultural operations were not excluded as road transport vehicles. On that basis, the allowance under the relevant provision was available.

Conclusion: The Tribunal was justified in holding that the assessee was entitled to investment allowance on such tractors and agricultural machinery.

Final Conclusion: The reference was answered in favour of the assessee on both questions, and the matters stood concluded accordingly.

Ratio Decidendi: A tractor used in agricultural operations is not a transport vehicle for the purpose of denying the statutory allowance, and therefore qualifies for the claimed depreciation and investment allowance.

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