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2015 (4) TMI 798 - AT - Income TaxClaim of higher depreciation on drilling Rigs - Rig claimed as Heavy motor vehicle (Lorry) - In case of two conflicting views, favourable to the assessee to be adopted - Held that:- CIT(A) has applied the judgment of the Hon’ble Madras High Court rendered in the case of Popular Borewell Service [1991 (4) TMI 59 - MADRAS High Court].However, in our considered view, the CIT(A) was not justified in disallowing the claim by not following the judgment of Hon’ble Jurisdictional High Court in the case of Gujco Carriers [2002 (2) TMI 48 - GUJARAT High Court]. In this case, it was held that the mobile crane of the assessee which admittedly was registered as a heavy motor vehicle, would clearly fall within the expression “motor lorries” which means motor trucks) in entry IIIE(1A) of the Table in Appendix I under rule 5 of the Income-tax Rules, 1962, since it was used by the assessee in its business of running the crane on hire. The assessee was entitled to depreciation at the rate of 40 per cent on the mobile crane.” In the case in hand also, as per the photograph given by the assessee, it is observed that the workover/servicing mobile Rigs specifically designed for such purpose. Moreover, as per proforma invoice enclosed at Page Nos. 24-28, it is evident that it pertains to 100 ton workover/servicing mobile rig. Therefore, the contention that the workover rig remains static is not correct. It is also noteworthy that the assessee-company has raised invoices per kilometer in respect of the movement of the Rig from one place to another. It is not the case that where the bill has been raised solely on the basis of static operations. As per ld. CIT(A) that the depreciation at higher rate would be available if crane is given on hire in view of the judgment of Hon’ble Gujarat High Court in the case of Gujco Carriers [2002 (2) TMI 48 - GUJARAT High Court] but it would not be available to workover mobile rig. We are unable to accept this reasoning as in both the cases there is mobility from place to another and both are designed for rendering specific services. The fact that State Transport Authority has registered the workover/servicing mobile rig under the category Heavy Goods Vehicle Drilling Rig. The Hon’ble jurisdictional High Court in the case of Gujco Carriers (supra), after examining the functions etc., held that motor vehicles like fire trucks, fork lift trucks and crane trucks which are designed for special services fall within the category of “Motor Trucks” (also called “”Motor Lorries”). The Hon’ble Andra Pradesh High Court has allowed higher rate of depreciation on Rig in the case of Super Drillers [1988 (2) TMI 24 - ANDHRA PRADESH High Court]. However, the Hon’ble Madras High Court in the case of Popular Borewell Service [1991 (4) TMI 59 - MADRAS High Court] has taken a different view. Hence, there are conflicting views of the Hon’ble Andra Pradesh High Court and the Madras High Court. Therefore, two views are possible; hence the view which is favourable to the assessee has to be adopted in view of the Judgment of the Hon’ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME Court]. Therefore, we are of the considered view that the ratio laid down by the Hon’ble Gujarat High Court in the case of Gujco Carriers is squarely applicable in the facts of the present case. Therefore, respectfully following the same we hereby direct the Assessing Officer to allow higher depreciation @ 40% on Rigs as claimed by the assessee. - Decided in favour of assessee.
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