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Issues: Interpretation of "electric machinery" for extra-shift depreciation allowance.
The judgment by the High Court of Rajasthan involved a question of law regarding the classification of electric motors and starters for the purpose of claiming extra-shift depreciation allowance under the Income-tax Act, 1961. The case revolved around whether the electric motors and starters should be considered as part and parcel of the plant and machinery or classified separately as electric machinery. The assessee, a vanaspati manufacturer, claimed the extra-shift depreciation allowance on the purchase of these items, arguing that they are integral components of the machinery. The Revenue contended that items specified in the appendix, including electrical machinery, are not eligible for extra-shift allowance. The Tribunal ruled in favor of the assessee, stating that the motors' function is to impart motion to machinery and they are part of the machinery, thus allowing the claim for extra-shift depreciation. The court analyzed the term "machinery" based on legal precedents and common parlance definitions. Referring to the case law of CIT v. Mir Mohammad Ali, it was established that machinery is a word of common parlance and should be interpreted accordingly. The court also cited the definition of "machinery" as a structure consisting of various parts for performing work and transmitting energy. Additionally, the court examined the definition of "electric plant," which includes prime motors like electric motors. The court emphasized that electricity, being an imponderable agent, is considered in the definition of electric plant, making electric motors part of electric machinery in commercial parlance. The court critiqued the Tribunal's reasoning that the source of power, whether electricity, diesel, or battery, should not determine the classification of electric motors. The court held that all types of motors, regardless of the power source, serve the same purpose of generating power. Therefore, the Tribunal erred in considering electric motors and starters as part of the plant and machinery rather than electric machinery. As a result, the court ruled in favor of the Revenue, denying the extra-shift depreciation allowance to the assessee. The judgment concluded by answering the reference in favor of the Revenue without any costs awarded.
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