1996 (6) TMI 33 - HC - Income Tax

Corrosive Chemicals, Depreciation And Development Rebate, Higher Rate, New Industrial Undertaking, Rate Of Depreciation, Special Deduction, Sugar Industry

Summary

Issues:
1. Relief under section 80J for seed processing unit.
2. Relief under section 80J for cattle feed unit.
3. Higher rate of depreciation and development rebate for machinery in contact with corrosive chemicals.

Analysis:

1. Relief under section 80J for seed processing unit:
The court referred to a previous case involving the same assessee where relief under section 80J for the seed processing unit was granted. Based on the precedent, the court found no infirmity in granting relief under section 80J for the seed processing unit for the assessment year in question. The court answered this question in the affirmative in favor of the assessee.

2. Relief under section 80J for cattle feed unit:
The issue of relief under section 80J for the cattle feed unit was remitted back to the Tribunal for reconsideration as there was insufficient evidence on record regarding the manufacturing or processing activities related to the cattle feed unit. The court directed the Tribunal to reexamine the issue based on the facts and merits of the case.

3. Higher rate of depreciation and development rebate for machinery in contact with corrosive chemicals:
The court considered the claim for higher depreciation and development rebate for machinery in contact with corrosive chemicals in the context of the assessee's sugar manufacturing activities. The Revenue disputed the claim, arguing that the machinery did not come into contact with corrosive materials. Various High Court decisions were cited regarding similar claims for higher depreciation based on machinery exposure to corrosive materials. The court directed the Tribunal to verify the facts and determine if the machinery used in sugar production came into contact with corrosive chemicals for granting higher depreciation and development rebate. The court also highlighted the need for specific details and evidence to support the claim for higher depreciation in such cases.

In conclusion, the court upheld relief under section 80J for the seed processing unit, remitted the issue of relief under section 80J for the cattle feed unit back to the Tribunal for further consideration, and directed the Tribunal to verify the machinery's exposure to corrosive chemicals for granting higher depreciation and development rebate.