COMMISSIONER OF INCOME TAX Vs. KAMDHENU AGENCIES

JUDGEMENT

(1.) THE Tribunal, Indore Bench, Indore, has on an application under S. 256(1) of the IT Act, 1961 (for short, "the Act"), made by the applicant Department, referred to this Court the following questions, said to be of law, arising out of its order dt. 29th May, 1991, passed in ITA No. 407/(Ind) of 1989:

(2.) THE year of assessment involved is 1984 85, the previous year ending on 30th June, 1983. The assessee is a registered partnership firm carrying on business in drilling bore wells (tube wells) and for that purpose they used rigs and compressors. The assessment was originally completed under s. 143(1) on 25th Jan., 1985. Later, it was reopened under S. 142(2)(b) and was reframed under s. 143(3). The assessee was allowed depreciation on machinery at 30 per cent and was also given investment allowance under S. 32A. The CIT, however, on scrutiny of the records of the case, found that the assessment order framed under S. 143(3) was erroneous and prejudicial to the interests of the Revenue. He was of the view that the depreciation on machinery should have been allowed at 15 per cent only and no investment allowance should have been allowed on that machinery under S. 32A. He, therefore, by his order dt. 2nd March, 1989, set aside the assessment to the extent as indicated above. A copy of the assessment is marked as Annexure "A" while that of the CIT is Annexure "B" forming part of the statement of the case. The assessee came in appeal before the Tribunal. The Tribunal allowed the appeal holding that the depreciation at 30 per cent was allowable on rigs and compressors and that the assessee was also entitled to investment allowance in respect of the machinery purchased by him for the drilling operations. Copy of the Tribunal's order dt. 4th May, 1991, is Annexure "C". Dissatisfied by the order of the Tribunal, the applicant Department moved an application under s. 256(1), whereupon the Tribunal has referred the aforesaid questions for the opinion of this Court.

(3.) THE controversy projected in the case stands resolved by a decision of the Andhra Pradesh High Court in the case of CIT vs. Super Drillers (1988) 73 CTR (AP) 97 : (1988) 174 ITR 640 (AP) : TC 27R.433 : TC 28R.239, wherein under similar set of facts, it is held :