2002 (7) TMI 842 - HC - Income Tax

Gujarat HC Affirms 30% Depreciation on Dumpers for Road Construction, Citing Shiv Construction Co. vs. CIT Precedent.

Commissioner of Income Tax Versus H.M.T. Construction Co.

The Gujarat HC ruled in favor of the assessee, affirming the Appellate Tribunal's decision to allow a 30% depreciation rate on dumpers used in road ... - The Gujarat High Court, comprising Hon'ble Mr. Justice M.S. Shah and Hon'ble Mr. Justice K.A. Puj, delivered an oral judgment in Income Tax Reference No. 164 of 1989. The legal question addressed was whether the assessee is entitled to a 30% depreciation rate on dumpers used in road construction.Initially, the Income-tax Officer granted a 30% depreciation rate. However, the Commissioner of Income-tax challenged this under section 263 of the I.T. Act, asserting that dumpers should be classified under 'Road making plant and machinery' with a 15% depreciation rate, as per Appendix I Part I of Rule 5 of the I.T. Rules, 1962. The assessee argued that dumpers fall under 'earth moving machinery,' which warrants a 30% rate.The Appellate Tribunal, referencing its decision in M/s. Hindustan Construction Company, upheld the 30% depreciation rate for dumpers, overturning the Commissioner's directive.The High Court, referring to its precedent in Shiv Construction Co. vs. CIT (1987) 165 ITR 160, confirmed that dumpers are machinery used in the assessee's business, justifying the 30% depreciation rate. The Court found no distinguishing features in the present case and ruled in favor of the assessee, affirming the Tribunal's decision and disposing of the reference without costs.