2010 (7) TMI 1094 - AT - Income Tax

Summary

Issues involved:
The judgment involves the disallowance of depreciation claimed on machineries purchased under the Technology Up-gradation Fund Scheme (TUFS) of the Government of India for the assessment year 2005-06.

Issue 1: Disallowance of depreciation
The Assessing Officer (AO) disallowed depreciation claimed on plant and machinery under TUFS, stating that the higher depreciation claimed was not eligible under Income Tax Rules. The CIT(A) confirmed this finding. The Tribunal, however, considered the issue in favor of the assessee based on previous judgments and held that texturising and twisting activities are part of processing, covered under the relevant rules. The Tribunal allowed the claim of the assessee, setting aside the orders of the lower authorities and deleting the entire addition.

Key Details:
- The AO disallowed depreciation claimed under TUFS for plant and machinery.
- The CIT(A) upheld the AO's decision.
- The Tribunal ruled in favor of the assessee, stating that texturising and twisting activities are part of processing.
- Previous judgments were cited to support the assessee's claim.
- The Tribunal allowed the claim and deleted the entire addition.

Conclusion:
The Tribunal allowed the appeal of the assessee, setting aside the orders of the lower authorities and deleting the disallowed depreciation amount.