SHIV CONSTRUCTIONS COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee, a partnership firm, is engaged in the business of construction of roads and buildings. In the course of assessment for the asst. yrs. 1974 75 and 1975 76, the ITO allowed depreciation at the rate of 30 per cent on the dumpers used by the assessee for the purpose of its business. The depreciation was so allowed on the assumption that dumpers were motor lorries or other road transport vehicles entitled to such depreciation under Part III D(9) of the depreciation schedule attached to the IT Rules. However, the assessee's claim for development rebate on those dumpers was disallowed by the ITO. The view taken by the ITO was confirmed by the AAC. The assessee carried the matter in appeal before the Tribunal ("Tribunal" for short) and claimed that dumpers were machinery and that the assessee was entitled to development rebate on the dumpers. The Tribunal accepted the assessee's claim and allowed the assessee's claim for development rebate. On the basis of the Tribunal's decision, the ITO rectified the assessment order and held that dumpers being tools of business in the hands of the assessee and not motor lorries or other transport vehicles, the assessee was not entitled to claim depreciation at the rate at which it claimed. Rectification order passed by the ITO was confirmed by the AAC and the Tribunal. It is in the background of the above facts that the following question has been referred to us under S. 256 (1) of the IT Act, 1961, in IT Ref. No. 312 of 1983 :

(2.) AN identical question, namely, whether the dumpers are road transport vehicles or not arose in the asst. year 1980 81. In that year also, the assessee claimed depreciation at 30 per cent on the dumpers on the ground that they were road transport vehicles. However, in view of the decision of the Tribunal for the asst. year 1974 75 that dumpers were not road transport vehicles and they were machinery or tools used for the assessee's business, the assessee's claim for depreciation at 30 per cent was not held admissible. The view taken by the ITO was confirmed by the AAC and the Tribunal. The assessee being dissatisfied with the decision of the Tribunal, the following question has been referred to us for our opinion by the Tribunal for the asst. year 1980 81 in IT Ref. No. 28 of 1985 :

(3.) IN view of the answer given by us in IT Ref. No. 533 of 1980 [CIT vs. Shiv Constructions (supra)], the assessee must succeed in IT Ref.s Nos. 312 of 1983 and 28 of 1985. The Revenue cannot take up an inconsistent stand that the dumpers were road transport vehicles for the purpose of development rebate and they were not so for the purpose of depreciation. In fact, the stand of the Revenue all along has been that dumpers were road transport vehicles and, therefore, the assessee was not entitled to development rebate thereon. It was only when the Tribunal took the view that dumpers were machinery or tools used for the purpose of business of the assessee and that, for that reason, the assessee cannot be denied development rebate on the ground that they were road transport vehicles that the Revenue changed its stand and the assessment orders for the asst. yrs. 1974 75 and 1975 76 came to be rectified and, as stated above, for the asst. yr. 1980 81, the assessee was denied depreciation on the dumpers as road transport vehicles. However, in view of the fact that the Revenue has succeeded in IT Ref. No. 533 of 1980, as a necessary corollary, the assessee must succeed in IT Ref. Nos. 312 of 1983 and 28 of 1985. Dumpers are road transport vehicles as contended by the Revenue in IT Ref. No. 533 of 1980, and, consequently, the assessee is entitled to depreciation on that basis.