2009 (3) TMI 1006 - HC - Income Tax

Summary

Issues involved: Interpretation of additional depreciation u/s 32(1)(iia) of the IT Act, 1961 for a de-inking plant in a public sector company engaged in newsprint manufacturing.

Summary:
The appeal by the Revenue questioned the Tribunal's decision to uphold the grant of additional depreciation u/s 32(1)(iia) of the IT Act, 1961 for a de-inking plant in a public sector company. The company claimed additional depreciation for the plant, which converts waste paper into pulp. The Revenue argued that since the installed capacity of newsprint remained unchanged, the company was not eligible for additional depreciation. However, the company contended that the increase in installed capacity of pulp, which is a marketable intermediary product, made them eligible for the benefit. The Tribunal found in favor of the company, stating that the increase in installed capacity of the pulp plant due to the de-inking machinery installation qualified them for additional depreciation. The Court agreed with the Tribunal, emphasizing that pulp being a marketable commodity produced by the company justified the claim for additional depreciation, even if it was an intermediary product. The Court dismissed the Revenue's appeal, rejecting their argument that installed capacity should only refer to the final product, newsprint.

In conclusion, the Court upheld the Tribunal's decision, ruling in favor of the company's eligibility for additional depreciation u/s 32(1)(iia) of the IT Act, 1961 based on the increase in installed capacity of the pulp plant, despite the final product remaining unchanged.