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Issues involved:
Interpretation of machinery provision for depreciation claim under section 32 of the Income-tax Act - Whether machinery coming into contact with corrosive chemicals qualifies for higher rate of depreciation - Consideration of expert report on machinery corrosion in fish processing business. Detailed Analysis: The primary issue in this case pertains to the interpretation of the machinery provision for depreciation claim under section 32 of the Income-tax Act. The specific question is whether machinery coming into contact with corrosive chemicals is entitled to a higher rate of depreciation. The case involves a company engaged in the processing of fish, fish meal, and fish oil, which claimed depreciation at 15% on its machinery due to exposure to corrosive chemicals. The Income-tax Officer initially allowed the claim, but the Commissioner disagreed and initiated proceedings under section 263 of the Act. The Appellate Tribunal upheld the Commissioner's view, questioning the extent of corrosive effect of substances like salt on the machinery. The Appellate Tribunal rejected a certificate from an Assistant Professor of Chemical Engineering stating that the machinery came into contact with corrosive chemical sodium chloride. The Tribunal focused on the absence of direct evidence showing the corrosive impact of the substances used in the fish processing. However, the certificate detailed the corrosive nature of the environment in the fish processing plant, highlighting the presence of chloride, fatty acids, and amino acids leading to severe corrosion of the machinery. The Tribunal failed to consider these critical details in the certificate. The Court analyzed previous decisions related to the definition of "corrosive chemicals" and the requirement for direct contact with such chemicals for claiming higher depreciation. The Court emphasized that the purpose of higher depreciation rates is to account for machinery with shorter lifespans due to exposure to corrosive substances. In this case, the expert's certificate clearly demonstrated the machinery's exposure to corrosive chemicals, justifying the claim for higher depreciation rate. The Court concluded that the Income-tax Officer was correct in accepting the claim, ruling against the Revenue's contention. In conclusion, the Court answered the question in the negative, supporting the assessee's entitlement to a higher rate of depreciation for machinery exposed to corrosive chemicals in the fish processing business. The judgment emphasizes the importance of considering expert opinions and technical details in determining depreciation claims under the Income-tax Act.
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