Tribunal affirms depreciation on air compressor & investment allowance on trak-shovel for construction activities

The Tribunal upheld the depreciation at 30% on the air compressor, considering it essential for earth-moving activities in dam construction, falling under the category of earth-moving machinery. Additionally, the Tribunal allowed the investment allowance on the trak-shovel used for construction activities, differentiating it from road transport vehicles based on its primary function of earth excavation and design. The Department's arguments against both decisions were rejected, and the Tribunal confirmed the CIT(A)'s decisions, dismissing the appeals.

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Issues:
Depreciation on air-compressor at 30% of WDV.
Investment allowance on trak-shovel.

Depreciation on air-compressor:
The assessee claimed 30% depreciation on the air compressor used in heavy construction works like dams, arguing it was earth-moving machinery. The ITO disagreed, allowing only 15% depreciation, stating air compressors were not used for digging or moving earth. The CIT(A) allowed 30% depreciation, considering the air compressor's role in blasting hard earth. The Tribunal upheld the CIT(A)'s decision, emphasizing that the air compressor was essential for earth-moving activities in dam construction, falling under the category of earth-moving machinery. The Department's argument that the air compressor was not earth-moving machinery was rejected.

Investment allowance on trak-shovel:
The ITO denied investment allowance on a trak-shovel used in construction, considering it a road transport vehicle under the Motor Vehicles Act. The CIT(A) allowed the investment allowance, highlighting the trak-shovel's primary function of earth excavation. The Department argued that the trak-shovel was a road transport vehicle, citing precedents related to dumpers. The Tribunal analyzed the trak-shovel's purpose and usage, concluding it was not a road transport vehicle but an earth-moving equipment, eligible for investment allowance. The Tribunal differentiated the trak-shovel from dumpers based on its functionality and design, rejecting the Department's argument. The Tribunal confirmed the CIT(A)'s decision to allow investment allowance on the trak-shovel.

In conclusion, the Tribunal dismissed the appeals, upholding the depreciation at 30% on the air compressor and allowing the investment allowance on the trak-shovel used for construction activities.

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