2003 (9) TMI 57 - HC - Income Tax

Whether, Tribunal is right in law and on facts in directing the Inspecting Assistant Commissioner to allow depreciation at the rate of 15 per cent. on diesel generating set? - Tribunal has taken note of the fact that depreciation had been allowed on the same machinery at the rate of 15% to the assessee for all the preceding assessment years and also subsequent years. In our opinion, in light of this peculiar factual position, it is not necessary to interfere with the finding recorded by the Tribunal and we hold that the Tribunal was justified in law in directing the Assessing Officer to allow depreciation at the rate of 15 per cent. on the diesel generating set.

Issues:
1. Interpretation of depreciation rate for diesel generating set.
2. Revisional action under section 263 of the Income-tax Act, 1961.
3. Consistency in allowing depreciation on machinery.
4. Tribunal's authority to direct Assessing Officer.

Interpretation of Depreciation Rate for Diesel Generating Set:
The issue in this case revolved around the interpretation of the depreciation rate applicable to a diesel generating set owned and used by the assessee. The assessee, a limited company, claimed depreciation at the rate of 15 per cent. on the diesel generating set, arguing that it was part of the same machinery used in the business. The Assessing Officer initially granted the claim, but the Commissioner of Income-tax, under section 263 of the Act, restricted the depreciation rate to 10 per cent., emphasizing the distinct and independent nature of each assessment. The Tribunal, however, referred to decisions from different benches and concluded that the generating set was entitled to depreciation at 30 per cent., but since the assessee had limited its claim to 15 per cent., it was deemed allowable.

Revisional Action under Section 263 of the Income-tax Act, 1961:
The Commissioner of Income-tax exercised revisional action under section 263 of the Income-tax Act, 1961, to restrict the depreciation rate on the diesel generating set claimed by the assessee. The Commissioner's decision was based on the argument that each assessment should be considered distinct and independent. However, the Tribunal disagreed with this approach and considered the peculiar factual position of the case, where depreciation had consistently been allowed at 15 per cent. on the same machinery in preceding and subsequent assessment years. The Tribunal's decision highlighted the need to consider the specific circumstances of the case rather than a blanket application of revisional powers.

Consistency in Allowing Depreciation on Machinery:
The Tribunal's decision emphasized the importance of consistency in allowing depreciation on machinery used by the assessee. It noted that the depreciation had been consistently allowed at the rate of 15 per cent. on the same machinery for preceding and subsequent assessment years. This consistency played a crucial role in the Tribunal's determination that the assessee was entitled to depreciation at the claimed rate for the diesel generating set, which was part of the same machinery.

Tribunal's Authority to Direct Assessing Officer:
The Tribunal's authority to direct the Assessing Officer to allow depreciation at the rate of 15 per cent. on the diesel generating set was a key aspect of the judgment. The Tribunal's decision was based on a thorough consideration of the factual position, including past practices of allowing depreciation at the claimed rate. The High Court upheld the Tribunal's decision, affirming that the Tribunal was justified in law in directing the Assessing Officer to allow depreciation at the rate of 15 per cent. on the diesel generating set. The judgment

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