1. ' N.K. JAIN, J.---The Income-tax Appellate Tribunal, Indore Bench, Indore, has on an application under section 256(1) of the Income Tax Act, 1961 (for short, "the Act"), made by the applicant- Department, referred to this Court the following questions, said to be of law, arising out of its order, dated May 9, 1991, passed in I.T.A. No,407/(Ind) of 1989: "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Commissioner of Income-tax was not justified in invoking the provisions of section 263?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled to depreciation at 30 per cent. On machinery meant for drilling wells, holes, tube wells, etc., and investment allowance on such machinery?"
2. ' The year of assessm ent involved is 1984-85, the previous year ending on June 30, 1983. The assessee is a registered partnership firm carrying on business in drilling bore wells (tube-wells) and for that purpose they used rigs and compressors. The assessment was originally completed under section 143(1) on January 25, 1985. Later, it was reopened under section 142(2)(b) and was reframed under section 143(3). The assessee was allowed depreciation on machinery at 30 per cent and was also given investment allowance under section 32-A. The Commissioner of Income- tax, however, on scrutiny of the record of the case, found that the assessment order framed under section 143(3) was erroneous and prejudicial to the interests of the Revenue. He was of the view that the depreciation on machinery should have been allowed at 15 per cent. Only and no investment allowance should have been allowed on that machinery under section 32-A. He, therefore, by his order dated March 2, 1989, set aside the assessment to the extent as indicated above. A copy of the assessm ent is marked as flexure "A" while that of the Commissioner of Income-tax is Annexure "B" forming part of the statement of the case.
3. ' The assessee came in appeal before the Tribunal. The Tribunal allowed the appeal holding that the depreciation at 30 per cent. Was allowable on rigs and compressors and that the assessee was also entitled to investment allowance in respect of the machinery purchased by him for the drilling operations. Copy of the Tribunal's order, dated May 9, 1991, is Annexure "C".
4. ' Dissatisfied by the order of the Tribunal, the applicant-Department moved an application under section 256(1), whereupon the Tribunal has referred the aforesaid questions for the opinion of this Court.
5. ' We have heard Shri D.D. Vyas, learned counsel for the applicant department, and Shri H.C. Sarda, learned counsel for the non-applicant /assessee.
6. ' The controversy projected in the case stands resolved by a decision of the Andhra Pradesh High Court in the case of CIT v. Super Drillers (1988) 174 ITR 640, wherein under similar set of facts, it is held (headnote):
(i) that the drilling equipment was used by the assessee for the purpose of business carried on by it in order to bring to the surface underground water. Water deposits lie hidden under the ground and the purpose of operating the equipment was to go into the ground and produce water lying hidden under the ground. It would be wrong to think that drilling operations do not result in the production of any articles or thing. Drilling operations do result in the production of underground water, for use on the surface of the ground and in that sense it must be held that the assessee is an industrial undertaking. It was admitted by the Revenue that the drilling equipment was new and was installed after March 31, 1976. The assessee was, therefore, entitled to investment allowance in respect of it;
(ii) that the description given in the Depreciation Schedule in item D(4) of Appendix I, Part I, to the Income Tax Rules, 1962, is not exhaustive but merely illustrative. What is specified there is earth moving machinery employed in heavy construction work such as dams, tunnels, canals, etc. The use of the expressions 'such as' and etc.' shows that the description is illustrative. The Tribunal studied the scientific and technical literature concerning the drilling operations conducted by the assessee and also went through a lot of fact information before recording the finding that the drilling equipment was covered by item D(4). The Tribunal was justified in its conclusion and the assessee was entitled to depreciation at 30 per cent in respect of the drilling equipment."
7. ' The Tribunal on the facts of the case and relying upon the decision in the case of Super Drillers (1988) 174 ITR 640) (AP) has concluded and rightly so, that the assessee is an industrial undertaking and that the drilling equipment used by the assessee fell within items D(4) of Appendix I, Part 1, to the Income-tax Rules, 1962, and, therefore, the assessee was entitled to investment allowance as also the depreciation at the rate of 30 per cent in respect of the equipment. Nothing substantial could be demonstrated before us to take a different view in the matter.
8. ' We, therefore, answer both the questions in the affirmative, i,e,, in favour of the assessee and against the Department, but with no order as to costs. Counsel's fee is, however, allowed at Rs,750 each side, if certified.
9. ' Copy of the order be sent to the Tribunal.