TMI Blog2015 (4) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2011 for Assessment Year 2002-03 is being taken as the lead case for the purpose of narrating the facts. 3. In IT(SS)A No. 42/Ahd/2011 for Assessment Year 2002-03, the assessee has raised following grounds of appeal:- 1.1 The order passed u/s.250 on 12.10.2010 for A.Y .2002-03 by CIT(A)- III, Abad upholding the disallowance of higher rate of depreciation on workover rigs claimed by the appellant as heavy motor vehicle (Lorry) is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT (A) has grievously erred in not considering fully and properly the explanation furnished and evidence produced by the appellant with regard to the impugned disallowance. 2.1 The Ld. C1T(A) has erred in not considering the contention of the appellant that the notice U/S.153A and the proceedings initiated there under were wholly illegal, unlawful and without jurisdiction because the conditions were not fulfilled. 3.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding that work-over rigs were not heavy motor vehicle, i.e. motor lorry as per entry E/IA of Appendix-1 for depreciation allowance. 3.2 That in the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods Vehicle. He drew our attention to the RTO Registration Certificate enclosed at page No.29-43 in the paper-book. He further submitted that the Hon ble Gujarat High Court in the case of Gujco Carriers (supra) has examined the law and allowed a higher depreciation to the crane. He further placed reliance on the decision of the Co-ordinate Bench of the Tribunal, rendered in the case of ACIT vs. M/s. Bothra Shipping Services, Kolkata in ITA Nos. 58-61/Kol/2013 dated 19.12.2014; wherein the issue of allowability of higher depreciation on payloaders, JCBs and 400V loaders was examined and decided the issue in favour of the assessee. 6. On the contrary, ld. CIT-DR argued at length and submitted that there is no infirmity in the order of the CIT(A). He further submitted that the ratio laid down by the Hon ble Madras High Court, rendered in the case of CIT vs. Popular Borewell Service, [1992] 194 ITR 12 (Mad.), has been rightly applied by the ld. CIT(A). He submitted that the lorry and rig mounted on it are two different and separable unit. He submitted that the cost of Rig is higher than the lorry; therefore, he submitted that the assessee is not entitled for higher depreciation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry does not fall in the category of motor buses and motor lorries. It is of course true that rate and compressor are amounted on a lorry used for drilling BOREWELLS. It consists of three distinct items namely, Rig, compressor and lorry. The rig and compressor do not form an integral part of the motor lorry. Merely because the leak and compressor are mounted on a lorry to facilitate their easy and convenient transport from one place to another, it cannot be said that the rig and compressor either constitute integral parts of a lorry by themselves or can be appropriately, called or known as lorry. Therefore, the rig and compressor used for drilling bore well though mounted on a lorry, cannot be held to fall under the category of motor lorry occurring in entry number III(ii)D(9) of part one of appendix 1 to the income-tax rules 1962. Thus, the assessee is not entitled to depreciation at a special rate of 30% in respect of such rigs and compressor. 5.3 It may be mentioned that the above judgement was pronounced by the Hon'ble High Court after considering the decisions of popular BOREWELL services 194 ITR 12 of Madras High Court and the decision of Andhra Pradesh High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d transport vehicle . 5.4 The reliance of the appellant on the decisions of Hon'ble Gujarat High Court in the case of GUJCO carriers (256 ITR 50) (Guj) holding that a crane, is entitled for higher rate of depreciation and the decision of Kerala High Court in the case of Commissioner of income tax, cochin versus Gaylords constructions reported at 190 taxman 406 holding that a JCB machine is entitled for higher rate of depreciation is of no help to the appellant because the facts of the case are totally different in this case. Rather, there are direct judgements of two high courts against the appellant. Therefore, in my considered view, the appellant is not entitled to higher rate of depreciation. As regards the contention of the appellant that since the lorries on which the rigs are mounted are registered with RIO as a f lorry, the rigs are themselves motor lorries and hence entitled to higher rate of depreciation , it may be stated that even though the lorries are registered as a motor vehicle with the RTO, a rig and compressor is not registered as a motor lorry. Further since that particular motor lorry which is registered with the RTO is not used for the purpose of hiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement entered into by the Central Government under section 42 :] [Provided further that where an asset referred to in clause (i) or clause (ii) 77[or clause (iia)], as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) 77[or clause (iia)], as the case may be :] [Provided also that where an asset being commercial vehicle is acquired by the assessee on or after the 1st day of October, 1998 but before the 1st day of April, 1999 and is put to use before the 1st day of April, 1999 for the purposes of business or profession, the deduction in respect of such asset shall be allowed on such percentage on the written down value thereof as may be prescribed. Explanation.-For the purposes of this proviso,- (a) the expression commercial vehicle means heavy goods vehicle , heavy passenger motor vehicle , light motor vehicle , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee. Explanation 2.-For the purposes of this [sub-section] written down value of the block of assets shall have the same meaning as in clause* (c) of subsection (6) of section 43.] [Explanation 3.-For the purposes of this sub-section, 86[the expression assets ] shall mean- (a) tangible assets, being buildings, machinery, plant or furniture; (b) intangible assets, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature87. Explanation 4.-For the purposes of this sub-section, the expression know-how means any industrial information or technique likely to assist in the manufacture or processing87 of goods or in the working of a mine, oil-well or other sources of mineral deposits (including searching for discovery or testing of deposits for the winning of access thereto). [Explanation 5.-For the removal of doubts, it is hereby declared that the provisions of this sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich bears to the amount for which the motor car is sold or, as the case may be, the amount of any insurance, salvage or compensation moneys payable in respect thereof (including the amount of scrap value, if any) the same proportion as the amount of twenty-five thousand rupees bears to the actual cost of the motor car to the assessee as it would have been computed before applying the said proviso; (2) sold includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is [an Indian company or in a scheme of amalgamation of a banking company, as referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949) with a banking institution as referred to in sub-section (15) of section 45 of the said Act, sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of that Act, of any asset by the banking company to the banking institution.]] (iv) [***] (v) [***] (vi) [***] (1A) [***] [(2) Where, in the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile crane registered as a heavy motor vehicle under the Motor Vehicles Act and the rules made thereunder with the RTO would fall within the expression motor lorries contained in item No. IIIE(1A) of Appendix I of the said Rules. The Hon ble Court observed that a mobile crane mounted on a truck constitutes a single unit known as a truck crane which is adapted for use upon roads for special services. The truck on which the crane is mounted is constructed and adapted specially to carry the crane. It is further observed that there can be other special services to be performed by motor vehicles designed for such services. Thus, a lorry, i.e., truck adapted or designed to carry a crane is meant for special services of lifting load, moving it side by side, rotating it or moving it horizontally. Most industrial trucks permit mechanized pick-up and deposit of the loads, eliminating manual work in lifting as well as transporting. The crane truck is a portable boom crane mounted on an industrial truck. It may be used with hooks, grabs, and slings for bundled or coiled material, industrial trucks which would also come within the expression motor lorries are described as follows in the En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 CIT vs. Super Drillers (supra). However, the Hon ble Madras High Court in the case of CIT vs. Popular Borewell Service (supra) 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., reported in 88 ITR 192. 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 (supra) is squarely applicable in the facts of the present case. Therefore, respectfully following the same we hereby direct the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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