Judgment:
1. This is a reference application under Section 256(2) of the Income-tax Act, 1961, at the instance of the Revenue, seeking reference of the following question for the opinion of this court :
'Whether, on the facts and in the circumstances of the case and considering the fact that in the case quoted by the Income-tax Appellate Tribunal, i.e., CIT v. Popular Borewell Service : [1992]194ITR12(Mad) , the Madras High Court had held that depreciation of 30 per cent. was not allowable on rig and compressor used in drilling borewell, the Appellate Tribunal was justified in holding that depreciation at 30 per cent. was allowable on rig and compressor used in drilling borewells ?'
The respondent-assessee claimed depreciation at 30 per cent. on the rig and compressor machines which was granted by the Assessing Officer, However, later on the Assessing Officer, rectified the order and reduced the depreciation benefit to 15 per cent. only. The Commissioner of Income-tax (Appeals) allowed the claim of the assessee and restored 30 per cent. after referring to the depreciation schedule provided in the Rules. The Appellate Commissioner held that, item No. (7)D of III, Appendix I, covered the rig and compressor. The Income-tax Appellate Tribunal relying on a decision of the Madras High Court reported in CIT v. Popular Borewell Service : [1992]194ITR12(Mad) affirmed the order of the Appellate Commissioner.
It is contended by Mr. L. M. Lodha learned counsel appearing for the Revenue, that the judgment of the Madras High Court in CIT v. Popular Borewell Service : [1992]194ITR12(Mad) has not been correctly interpreted by the Income-tax Appellate Tribunal. The Madras High Court held that merely because the rig 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 appropriately called or known as 'lorry'. It is submitted that the rig and compressor used for borewells mounted on a lorry cannot be held to fall under the category of motor-lorry occurring in entry No. III(ii) D(9) of Part I of the Appendix I to the Income-tax Rules, 1962. We are satisfied that a referable question of law arises from the order of the Tribunal.
Consequently, we direct the Income-tax Appellate Tribunal, Jaipur Bench, to state the statement of facts and refer the question of law referred to above for the opinion of this court.