COMMISSIONER OF INCOME-TAX vs. UTKARSH BUILDERS

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 104 of 1991 For Approval and Signature: Hon'ble MR.JUSTICE A.R.DAVE and Hon'ble MR.JUSTICE A.M.KAPADIA ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus UTKARSH BUILDERS -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 104 of 1991 MR MANISH R BHATT for Petitioner No. 1 NOTICE SERVED for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE A.R.DAVE and MR.JUSTICE A.M.KAPADIA Date of decision: 25/06/2003 ORAL JUDGEMENT (Per : MR.JUSTICE A.R.DAVE) At the instance of the revenue, the following question of law has been referred to this court for its opinion by the Income Tax Appellate Tribunal, Ahmedabad Bench 'B' under the provisions of sec. 256(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') : "Whether, in law and on facts, the assessee is entitled to depreciation at the rate of 30% on two items, namely, (1) Hot Mixing Plant and (2) Paver Finishing Machine used by the assessee in its activity of road building?" 2. We have heard Sr. Standing Counsel Shri M.R. Bhatt for the applicant revenue. Nobody has appeared for the respondent assessee, though the respondent assessee has been duly served with the notice of this court. 3. The facts giving rise to this reference, in a nutshell, are as under : 4. For the Assessment Year 1982-83 the assessee had claimed depreciation @ 30% on the following two machineries: (1) Hot Mixing Plant, and (2) Paver Finishing Machine. 5. The assessee is in business of construction of roads and, according to it, both the machines referred to hereinabove were "earth-moving machinery employed in heavy construction works such as dams, tunnels, canals, etc." as incorporated in Appendix-I, at Sr.No. III-D(4), of The Income-tax Rules, 1962 and, therefore, the assessee was entitled to depreciation on the said machines @ 30%. 6. The ITO, however, allowed depreciation @ 15% because, according to him, the said machines were "roadmaking plant and machinery" as incorporated in Appendix I, at Sr. No. III-B(14), of The Income-tax Rules, 1962. 7. Being aggrieved by the order passed by the ITO, the assessee filed an appeal before the CIT (Appeals). The CIT (Appeals), after hearing the concerned parties, upheld the view taken by the ITO. 8. Being aggrieved by the order passed by the appellate authority, the assessee filed an appeal before the Appellate Tribunal. The Tribunal considered the facts of the case and also considered the decision rendered by the Tribunal in the case of Hindustan Construction Co. v. ITO (30 ITD 171) and came to the conclusion that the machines referred to hereinabove were 'earth-moving machinery employed in heavy construction works such as dams, tunnels, canals, etc' and, therefore, the assessee was entitled to depreciation @ 30% on the said machinery. 9. In the aforesaid circumstances, this court has to decide the question referred to hereinabove and to opine whether the assessee was entitled to depreciation @ 30% or 15%. 10. Learned Counsel Shri M.R. Bhatt has submitted that the Tribunal was in error while considering and following its order passed in Hindustan Construction Co. (supra). He has drawn our attention to the said order and also to a circular, which has been referred to in