1993 (10) TMI 65 - HC - Income Tax

Summary

Issues Involved:
1. Inclusion of T.S.I. anodes in the list of energy-saving devices eligible for higher depreciation.
2. Legality and validity of Rule F(2A) of Appendix I in Section III of the Income-tax Rules, 1962.
3. Petitioner's entitlement to higher depreciation for the assessment years 1984-85 and 1985-86.

Detailed Analysis:

1. Inclusion of T.S.I. anodes in the list of energy-saving devices eligible for higher depreciation:

The petitioner, a company engaged in the manufacture of titanium substrate insoluble anodes (T.S.I. anodes), claimed that these anodes resulted in significant power savings and should be included in the list of energy-saving devices eligible for higher depreciation. The petitioner based its claim on the Finance Minister's budget speeches in 1982 and 1983, which proposed allowing higher depreciation rates (30% and 100% respectively) for energy-saving devices.

However, the respondents argued that the inclusion of specific items for higher depreciation is a matter of policy and that the list of energy-saving devices was finalized in consultation with relevant authorities. They contended that the petitioner had no legal right to demand the inclusion of T.S.I. anodes in the list and that the court should not interfere with policy decisions unless they are arbitrary or unreasonable.

The court noted that the Finance Minister's budget proposals are subject to parliamentary approval and may not necessarily be implemented as proposed. The court held that the petitioner could not claim higher depreciation based solely on the Finance Minister's speeches, as the proposals had not been incorporated into the Finance Acts. The court further stated that fiscal policy decisions involve complex considerations, and Parliament has the discretion to classify items for differential treatment.

2. Legality and validity of Rule F(2A) of Appendix I in Section III of the Income-tax Rules, 1962:

The petitioner also filed a writ petition challenging the legality and validity of Rule F(2A) of Appendix I in Section III of the Income-tax Rules, 1962, which contained the list of energy-saving devices. The petitioner argued that the exclusion of T.S.I. anodes from the list was arbitrary and violative of Article 14 of the Constitution of India.

The respondents countered that the classification of items for higher depreciation is based on various economic criteria and technical consultations. They maintained that the list of energy-saving devices was finalized after considering the extent of power savings achieved by different devices. The respondents argued that the petitioner's claim of arbitrariness was unfounded, as the petitioner had not provided sufficient data to demonstrate that T.S.I. anodes achieved significant power savings.

The court held that the classification made by Parliament for higher depreciation rates is within its discretion and does not violate the doctrine of equality. The court emphasized that fiscal policy decisions involve complex economic considerations and that the judiciary should not interfere with such decisions unless they are arbitrary or discriminatory.

3. Petitioner's entitlement to higher depreciation for the assessment years 1984-85 and 1985-86:

The petitioner sought similar relief for the assessment years 1984-85 and 1985-86, claiming higher depreciation for T.S.I. anodes. The court noted that the decision in the earlier writ petitions would govern this petition as well.

The court reiterated its stance that the petitioner could not claim higher depreciation based on the Finance Minister's budget proposals alone. The court also emphasized that the inclusion of specific items for higher depreciation is a matter of policy and that the petitioner had not provided sufficient data to support its claim.

Conclusion:

The court dismissed the writ petitions, holding that the petitioner could not claim higher depreciation for T.S.I. anodes based on the Finance Minister's budget proposals. The court also upheld the validity of Rule F(2A) of Appendix I in Section III of the Income-tax Rules, 1962, and emphasized that fiscal policy decisions are within the discretion of Parliament and should not be interfered with by the judiciary unless they are arbitrary or discriminatory. The court advised the petitioner to present relevant data and persuade the government to consider granting higher depreciation for T.S.I. anodes through appropriate channels.