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First Income-tax Officer Vs. Popular Borewell Service - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Madras
Decided On
Judge
Reported in(1986)15ITD420(Mad.)
AppellantFirst Income-tax Officer
RespondentPopular Borewell Service
Excerpt:
.....1983], accepted the claim of the assessee and held that it was entitled to depreciation at 30 per cent on rigs and compressors.aggrieved by the order of the aac, the department has filed the present appeal.3. after going through the record and hearing the learned representatives of the parties, we do not find any substance in this appeal. the impugned order of the aac is supported by the view consistently taken by the tribunal in such cases. the details of some of the cases are popular borewell service's case (supra), bharat rig service [it appeal no. 1427 (mad.) of 1980], o.p. palaniappan [it appeal no. 1279 (mad.) of 1981], tiruchengode borewell service [it appeal no. 935 (mad.) of 1981], bharat rig service [it appeal nos. 76 and 2536 (mad.) of 1983] and e.r.p. rangaswami [it appeal.....
Judgment:
1. The only question for consideration in this appeal is, whether the assessee is entitled to depreciation at 30 per cent on the rigs and compressors which are mounted on a lorry and used for drilling borewells.

2. The assessee-firm carries on the business of drilling borewells. In the course of assessment proceedings for the assessment year 1978-79, the assessee claimed depreciation at 30 per cent on the rigs and compressors under Item No. III(ii), D(9) of Part I of Appendix I to the Income-tax Rules, 1962 on the ground that they constituted an integral part of the lorry on which they were mounted and were also worked by the same engine which provided traction to the vehicle. The ITO rejected this claim of the assessee. However, on appeal, the AAC following the decision of the Tribunal in the case of the assessee for the assessment year 1979-80 in Popular Borewell Service [IT Appeal No.151 (Mad.) of 1983], accepted the claim of the assessee and held that it was entitled to depreciation at 30 per cent on rigs and compressors.

Aggrieved by the order of the AAC, the department has filed the present appeal.

3. After going through the record and hearing the learned representatives of the parties, we do not find any substance in this appeal. The impugned order of the AAC is supported by the view consistently taken by the Tribunal in such cases. The details of some of the cases are Popular Borewell Service's case (supra), Bharat Rig Service [IT Appeal No. 1427 (Mad.) of 1980], O.P. Palaniappan [IT Appeal No. 1279 (Mad.) of 1981], Tiruchengode Borewell Service [IT Appeal No. 935 (Mad.) of 1981], Bharat Rig Service [IT Appeal Nos. 76 and 2536 (Mad.) of 1983] and E.R.P. Rangaswami [IT Appeal No. 544 (Mad.) of 1983].

It would be evident from the decisions referred to above, that the Tribunal has been uniformly taking the view that the assessee is entitled to depreciation at 30 per cent on the rigs and compressors used in the business of drilling borewells on the ground that they constitute an integral part of the lorry on which they were mounted.

There is no good reason to take a different view on the point at issue in the present case when the facts are identical. It has been held by the Madras High Court in the case of CIT v. S. Devaraj [1969] 73 ITR 1 that it would be only proper and desirable that when the Tribunal takes a particular view, it should not contradict itself and come to a diametrically opposite view later on the same issue. To the same effect is the view of the Madras High Court in the case of CIT v. L.G.Ramamurthi [1977] 110 ITR 453. According to this authority, if a Bench of a Tribunal on the identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another Bench of the Tribunal on an earlier occasion, that will be destructive of the intitutional integrity itself. In view of these authorities, we are of the opinion that the final decision on the point involved in the present case should be left to the High Court. So far as the Tribunal is concerned, it should stick to the same view in order to avoid confusion and multiplicity of litigation.

4. The representative of the department has referred to the decision of the learned Third Member in the case of ITO v. Sivam & Co. [1984] 10 ITD 799 (Mad.) and urges that the assessee is not entitled to depreciation at 30 per cent. In our opinion, the decision of the Third Member in the aforesaid case would not warrant a change in the view consistently taken by us. A perusal of this decision would show that the Third Member of the Tribunal was not concerned with the question of grant of depreciation at 30 per cent on the rigs and compressors mounted on a lorry and used for drilling borewells. It is clearly mentioned in the order of the Third Member that there was no dispute between the Members as to the grant of depreciation at 30 per cent. The dispute related only to the grant of investment allowance under Section 32A(2)(b) of the Income-tax Act, 1961. This would be evident from the question referred to the Third Member as eproduced below : Whether, on the facts and in the circumstances of the case, the assessee (being held to be entitled to depreciation at the special rate of 30 per cent prescribed for motor lorries, on the drilling rigs and compressors used in the assessee's business of sinking borewells) is also entitled to investment allowance under Section 32A(2)(b) in respect of the above items of machinery Thus, the decision of the Third Member to the effect that investment allowance should be allowed on the rigs and compressors and not on the lorry should be restricted only to the point at issue before him. The observation of the learned Third Member to the effect that it would be proper, therefore, if depreciation is granted only on the last item (i.e., lorry) as a lorry, and at the general rate on the other two items (i.e., rigs and compressors) is mere obiter dictum and so, this observation cannot be followed in preference to the string of decisions of the Division Benches of the Tribunal in the cases referred to above.

We, therefore, hold that the view uniformly taken by the Tribunal in such cases should not be disturbed till some High Court takes a contrary view in the matter.

5. In view of the above discussion, we confirm the impugned order of the AAC.


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