COMMISSIONER OF INCOME-TAX vs. HINDUSTAN CONSTRUCTION CO

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ITR/140/1991HC GujaratGJHC24013373199117 July 2002Bench: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE K.A.PUJ2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court of Gujarat held that the Tribunal was correct in its decision. Following its own prior decision in ITR No. 164 of 1989 in the case of M/s. HMT Construction Co., where it was held that dumpers employed in road construction business are entitled to depreciation at 30%, the Court applied the same principle. The Court also noted that it had previously decided a reference for this very assessee for earlier assessment years, taking the same view. Therefore, the Court answered the question in the affirmative, in favour of the assessee and against the revenue. The operative direction was to answer the reference in favour of the assessee.

What were the facts?

The Commissioner of Income-tax (CIT) passed an order under Section 263 of the Income Tax Act, 1961, for assessment years 1982-83 and 1983-84. The CIT held that dumpers used by the assessee, Hindustan Construction Co., were not eligible for depreciation at 30% but only at 15%. The assessee appealed this decision to the Income Tax Appellate Tribunal (ITAT). The ITAT ruled in favour of the assessee, holding that dumpers were indeed earth-moving machinery and entitled to 30% depreciation. The revenue, dissatisfied with the ITAT's order, referred a question of law to the High Court of Gujarat.

What were the issues?

1. Whether the Tribunal was right in law and on facts in holding that the "dumpers" were used as "earth moving machinery" by the assessee and entitled to depreciation at the rate of 30%? (Question of law and fact, concerning the classification of assets for depreciation). Assessee's contentions: The assessee argued that dumpers are used as earth-moving machinery and are therefore entitled to depreciation at the higher rate of 30%. The judgment does not record specific arguments made by the assessee before the High Court, but their position was upheld by the Tribunal. Revenue's contentions: The revenue, represented by Mr. Manish R Bhatt, argued that dumpers should not be classified as earth-moving machinery and are only entitled to depreciation at 15%. The revenue's contention was that the CIT's order under Section 263, which reduced the depreciation rate, was correct.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 140 of 1991

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE K.A.PUJ

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO

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 HINDUSTAN CONSTRUCTION CO -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 140 of 1991 MR MANISH R BHATT for Petitioner No. 1 NOTICE SERVED for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE K.A.PUJ

Date of decision: 17/07/2002

ORAL JUDGEMENT

(Per : MR.JUSTICE K.A.PUJ) At the instance of the applicant- revenue, the following question of law is referred for the opinion of this Court:-

Whether, the Tribunal was right in law and on facts in holding that the "dumpers" were used as "earth moving machinery" by the assessee and entitled to depreciation at the rate of 30% ?

2.

Heard Mr Manish R Bhatt, learned Sr. Standing Counsel appearing for the applicant- revenue. Nobody appears on behalf of the assessee.

The assessment years involved are assessment years 1982-83 and 1983-84.

3.

Our attention is drawn to the decision of this Court in ITR No.164 of 1989 in the case of M/s. HMT Construction Co. wherein this Court has taken the view that the assessee was entitled to depreciation at the rate of 30% on the dumpers employed in its business of road construction.

Following the aforesaid decision, this Court has also decided the reference in the case of this very assessee for earlier assessment years and taken the same view.

4.

We are, therefore, of the opinion that the Tribunal was right in holding that depreciation at the rate of 30% is available on dumpers and not at the rate of 15% as held by the Commissioner of Income-tax while passing the order under Section 263 of the Act.

We, therefore, answer the above question in the affirmative i.e. in favour of the assessee and against the revenue.

5.

The Reference is accordingly disposed of with no order as to costs.

(M.S. Shah,J) (K.A. Puj,J) zgs/-

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