Depreciation on dumpers used in road construction upheld at machinery rates, not reduced as road transport vehicles.

Dumpers used in a road construction business were held to qualify for depreciation at 30% as machinery or tools under the depreciation schedule in Rule 5 of the Income-tax Rules, rather than being restricted to 15% as road transport vehicles. The Court followed an earlier decision on identical facts, finding no distinguishing feature, and rejected the Revenue's narrower classification. The revision under section 263 of the Income-tax Act, 1961 was therefore not justified on this issue, and the assessee's entitlement to the higher depreciation rate was upheld.

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Issues: Whether dumpers used in the assessee's road construction business were entitled to depreciation at 30% or were to be treated as road transport vehicles attracting only 15% depreciation, and whether the revision under section 263 of the Income-tax Act, 1961 was justified.

Analysis: The controversy turned on the proper classification of dumpers under the depreciation schedule in Rule 5 of the Income-tax Rules, 1962. The Court noted that an earlier decision had already held that dumpers used in the business were machinery or tools and could not be denied depreciation at 30% merely because they were regarded as road transport vehicles. As the facts were identical and no distinguishing feature was shown, the earlier view was followed.

Conclusion: The assessee was entitled to depreciation at 30% on the dumpers, and the Revenue's contention that only 15% was allowable failed. The question referred was answered in the affirmative, in favour of the assessee and against the Revenue.

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