Oil wells are plant and machinery and eligible for higher depreciation

Last updated: 12 June 2023
Quick Summary
The Income Tax Appellate Tribunal (ITAT) in Ahmedabad has ruled that oil wells should be classified as plant and machinery, not buildings, for tax depreciation purposes. This means companies involved in oil exploration can claim a higher depreciation rate of 60% on their oil wells. The tribunal overturned previous decisions that had classified them as buildings or allowed lower depreciation rates, referencing earlier rulings in similar cases.

Court :
ITAT, Ahmedabad

Brief :
The ITAT, Ahmedabad in the case of M/s.Joshi Technologies International Inc. v. The Asst. Director of Income Tax [ITA Nos. 3456/Ahd/2010 & 3195/Ahd/2011, dated May 19, 2023] held that oil wells are plant and machinery, and accordingly, higher depreciation would be allowed to the assessee.

Citation :
ITA Nos. 3456/Ahd/2010 & 3195/Ahd/2011, dated May 19, 2023

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Bimal Jain
Published in Income Tax
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