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Whether the allowance of depreciation on the assessee's machinery at 15% for the assessment years 1979-80 and 1980-81 is right in law? Analysis: The case involved a partnership firm engaged in dyeing, bleaching, and printing of art silk cloth. The firm claimed higher depreciation at 15% on its machinery, citing its processing of artificial silk cloth. Initially, the Income-tax Officer allowed depreciation at 10%, stating that the firm was mainly involved in blending and bleaching, not processing. However, the Commissioner of Income-tax (Appeals) directed the higher rate of 15% depreciation. The Revenue appealed to the Income-tax Appellate Tribunal, which, after reviewing the Central Excise Department's license and assessment orders, concluded that the firm was indeed processing artificial silk. The Tribunal found the firm entitled to the higher rate of depreciation, leading to the reference. During the hearing, it was established that the firm was engaged in dyeing, bleaching, and printing of art silk cloth, using machinery for these purposes. The firm argued that as it processed artificial silk, it fell under a category eligible for 15% depreciation. However, the court disagreed, stating that the firm was not manufacturing silk cloth but only dyeing, printing, and bleaching already manufactured cloth. As a result, the machinery used did not qualify as "artificial silk manufacturing machinery," thus not eligible for higher depreciation. The court referenced a previous case to support its conclusion that applying processes to already manufactured cloth did not constitute manufacturing or production under the law. In conclusion, the court answered the referred question in the negative, favoring the Revenue and rejecting the firm's claim for higher depreciation. The reference was disposed of with no costs awarded.
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