2012 (4) TMI 583 - AT - Income Tax

Depreciation @ 50% on machinery claimed to have been purchased under TUFS - Held that - Assessee is entitled for higher depreciation under TUFS

Summary

Issues:
Appeals from two different orders of CIT(A) for assessment years 2005-06 & 2006-07; Identical issues in both appeals.

Analysis:
1. The Revenue challenged the CIT(A) orders on grounds of legality and deletion of addition and depreciation allowance on machinery purchased under TUFS.
2. AO disallowed 50% depreciation claimed by assessee on machinery used for embroidery work on grey cloth; CIT(A) allowed claim citing relevant rules and resolutions.
3. Revenue argued that TUFS rules did not include embroidery for higher depreciation; Assessee relied on circulars and precedents supporting eligibility.
4. Assessee cited Ahmedabad Bench decisions and Supreme Court cases to support claim; Revenue disputed the validity of Ahmedabad Bench decisions.
5. Tribunal found circulars and bank documents supporting eligibility for higher depreciation under TUFS for embroidery machinery.
6. Tribunal upheld CIT(A) decision based on Ahmedabad Bench precedents and absence of contrary decisions; Dismissed Revenue's appeals for both assessment years.

This judgment clarifies the eligibility criteria for claiming higher depreciation under TUFS for machinery used in textile industry activities. It emphasizes the importance of relevant circulars, precedents, and adherence to specific rules in determining depreciation allowances. The Tribunal's decision was based on the interpretation of TUFS rules and supporting documentation, ultimately upholding the CIT(A) orders and dismissing the Revenue's appeals for both assessment years.