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Issues:
1. Claim for depreciation on payment under a collaboration agreement. 2. Claim for a lower rate of tax as an industrial company. Analysis: Issue 1: Claim for Depreciation on Payment under a Collaboration Agreement The assessee claimed depreciation on a payment made under a collaboration agreement, arguing that the know-how acquired was akin to a plant under section 43(3) of the Income Tax Act. The Tribunal noted that the payment was for various services agreed upon, not solely for specific documents mentioned in the agreement. The agreement included provisions for advice, information, services, training of personnel, and more, indicating a composite payment for multiple services. The Tribunal emphasized that the full know-how included additional elements beyond the documents mentioned in the agreement. Consequently, the claim for depreciation was rejected based on the nature of the payment and the services rendered under the agreement. Issue 2: Claim for Lower Rate of Tax as an Industrial Company The second issue revolved around the assessee's claim for a lower tax rate as an industrial company under the Finance Acts of the relevant years. The Tribunal deliberated on whether the assessee was engaged in the manufacture or processing of goods. The assessee's representative detailed the intricate process involved in producing end-products from raw materials, emphasizing the complexity and transformation in the manufacturing process. Drawing parallels with a relevant decision of the Gujarat High Court, the representative argued that the assessee's activities constituted manufacturing and processing of goods. It was highlighted that the bulk of the assessee's income stemmed from manufacturing-related activities. After considering the arguments and facts presented, the Tribunal concluded that the assessee qualified as an industrial company and was entitled to the lower tax rate for both years in question. Consequently, the appeals were partly allowed on this ground.
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