Law:

Section:

I. Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of - Assessment years 1978-79 and 1980-81 - Whether rig and compressor mounted on a lorry and used by assessee for drilling bore-wells could not be held to fall under 'motor lorry' occurring in Entry III (ii)(D)(9) of Part I of Appendix I to Income-tax Rules, 1962 and, therefore, were not entitled to depreciation at special rate of 30 per cent specified in said entry - Held, yes FACTS-I The assessees firm, carrying on the business of drilling bore-wells, claimed depreciation at 30 per cent on the rig and compressor under item No. III(ii)(D)(9) of Part I of Appendix I to the Income-tax Rules, 1962, on the ground that they constituted an integral part of the lorry on which they were mounted and were also worked by the same engine which provided traction to the lorry. The ITO rejected the claim. The AAC accepted the claim of the assessee. The Tribunal upheld the order of the AAC. On reference: HELD-I The rig and compressor mounted on a lorry and used by the assessees for drilling bore-wells consisted of three distinct items, viz., rig, compressor and lorry, and the rig and compressor did not form an integral part of the motor lorry. Further, the rig and compressor were not necessary for operating a motor lorry. Again, the rig and compressor were mounted on a lorry for the purpose of conveniently transporting them from place to place for sinking bore-wells. Merely because the rig and compressor were mounted on a lorry to facilitate easy and convenient transport, it could not be said that the rig and compressor either constitute integral parts of a lorry by them selves nor could they be appropriately called or known as a "lorry", as understood in common parlance. Therefore, such rig and compressor though mounted on a lorry, could not be held to fall under "motor lorry" occurring in entry III(ii)D(9) of Part I of Appendix I to the Rules. Therefore, the Tribunal was not right in holding that the assessees in those cases were entitled to depreciation at the special rate of 30 per cent in respect of the rig and compressor used for drilling bore-wells. II. Section 32 of the Income-tax Act, 1961 -…

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