1996 (8) TMI 76

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....vered by SYED SHAH MOHAMMED QUADRI J. --- In this reference, under section 256(1) of the Income-tax Act, 1961, the following question is referred to this court for opinion : " Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in holding that depreciation was allowable at 30 per cent. on the rigs engaged in drilling of borewells ?" Th....

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....ule in item No. III-D(4) of Appendix I, Part I, to the Income-tax Rules, 1962, was not exhaustive but merely illustrative and upheld the order of the Tribunal in that case in granting 30 per cent. depreciation in respect of the drilling equipment. Learned standing counsel for the Income-tax Department, however, relied upon the judgment of the Madras High Court in CIT v. Tamil Nadu Agro Industri....

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....ate as applicable to " plant and machinery " at 10 per cent., resisted the claim. The Income-tax Tribunal, on exhaustive consideration of the scientific literature and other relevant matters, recorded the finding that the drilling equipment fell under item No. III-D(4) and that was upheld by the Division Bench of this court on reference. The Bench expressed the opinion that item No. III-D(4) was n....

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....he excavation of earth in large quantity and in massive scale as is necessary in the case of construction work like dams, canals, etc., drilling machinery or rigs would not come within the ambit of item No. III-D(4). We have already noted that that item was construed by the Division Bench of our High Court as not being exhaustive but merely illustrative. We are in respectful agreement with the rea....