Commissioner of Income Tax vs Arihant Trust

K. Gnanaprakasam, J.—At the instance of the Revenue, the following two questions have been referred to this court, viz.,

"1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the Commissioner of Income Tax by exercise of powers u/s 263 was not justified in setting aside the assessment for the allowance of correct depreciation ?

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessee is entitled for the 30 per cent, depreciation on rigs mounted on lorries employed in digging horewells ?"

With regard to question No. 1, which deals with the powers of the Commissioner of Income Tax under the provisions of Section 263, it has been rightly held that the assessment was not only erroneous, but also prejudicial to the interests of the Revenue, and we affirm the said view taken by the Commissioner and answer the question in favour of the Revenue and against the assessee.

The second question is with regard to the allowing of depreciation for the rigs mounted on lorries. The assessee claimed 30 per cent, depreciation and the same was also accepted by the Tribunal. Learned counsel for the Revenue has brought to our notice the case in Commissioner of Income Tax Vs. Popular Borewell Service and others, , wherein, this court has held that the rigs and compressors fitted to the motor lorry do not form an integral part of the motor lorry and, therefore, depreciation only to the extent of 10 per cent, alone is allowable. The law has already been declared by this court. We, therefore, answer this question in favour of the Revenue to the extent that the assessee is entitled only to the extent of 10 per cent, and not 30 per cent. The questions are answered accordingly.