Earth-moving machinery classification for a pay loader supported higher depreciation in open-cast mining use

A terex pay loader used to lift coal from the earth, load it into a dumper, and transfer coal in open-cast mining was treated as earth-moving machinery under clause III(D)(8) of Appendix-I to the Income-tax Rules, 1962. On that functional use, it qualified for depreciation at 30 per cent. The High Court stated that this classification did not raise any substantial question of law for reference under section 256(2) of the Income-tax Act, 1961, and the machinery was rightly brought within the higher depreciation entry.

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Issues: Whether the terex pay loader was an earth-moving machinery falling under clause III(D)(8) of Appendix-I of the Income-tax Rules, 1962, and was entitled to depreciation at the rate of 30 per cent.

Analysis: The machine was used for lifting coal lying on the earth and loading it into a dumper, and could also be used for transferring the coal from the dumper to railway trolleys. On that functional use, it answered the description of earth-moving machinery used in open cast mining under clause III(D)(8) of Appendix-I. The view that the pay loader was entitled to depreciation at 30 per cent. therefore raised no substantial question of law for reference under section 256(2) of the Income-tax Act, 1961.

Conclusion: The pay loader was rightly treated as earth-moving machinery eligible for depreciation at 30 per cent., and the reference was not called for.

Ratio Decidendi: Machinery used for loading and moving earth or mineral in open cast mining falls within the depreciation entry for earth-moving machinery under Appendix-I.

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