Commissioner of Income Tax, NE Region, Shillong vs Chandmari Tea Co.(P) Ltd.

P. G. Agarwal. J.

In this case the following reference was made under section 256 (1) of the Income Tax Act at the instance of the Revenue:

�Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that tractor used as agricultural machinery is entitled to additional depreciation.�

Heard Shri GK Joshi, learned Senior Standing Counsel for the appellant. None has appeared for the assessee.

The facts in brief are that the assessee, a private limited company, claimed additional depreciation on tractor used in the tea garden as agricultural machinery for the assessment year 198586. The Assessing Officer disallowed the additional depreciation holding that the tractor is a ''road transport vehicle'' and, as such, in view of the provisions contained in proviso (b) to subsection (iia) of section 32 (1) of the Income Tax Act, additional depreciation is not allowable. The CIT (Appeals), however, set aside the said order and allowed additional depreciation holding that the tractor used as agricultural machinery is not a road transport vehicle. The above decision of the CIT (Appeals) was affirmed by the Tribunal. Hence the present reference by the Tribunal.

In Income Tax Reference No. 3 of 1997, this Court has held that tractor used in tea plantation is an agricultural machinery and is not a ''road transport vehicle''. There is no dispute that agricultural machinery used in the business at the relevant time was entitled to additional depreciation under section 32 (1) (iia) of the Act. Hence the additional depreciation was rightly allowed by the CIT (Appeals) and the Tribunal. There is no infirmity in the impugned order. Hence the reference is answered against the Revenue and in favour of the assessee.