1983 (9) TMI 148 - AT - Income Tax

Summary

Issues:
1. Depreciation claim for cold storage plant and machinery.

Analysis:
The judgment by the Appellate Tribunal ITAT Jabalpur involved a dispute regarding the depreciation claim for a cold storage plant and machinery. The initial dispute arose when the Income Tax Officer (ITO) allowed depreciation at 5% on the building and 10% on the machinery. The assessee contended that the cold storage should be considered a refrigeration plant, entitling it to a higher depreciation rate of 15% instead of the 10% allowed by the ITO. The Assistant Commissioner (AAC) noted that the specific sub-item referred to refrigeration plant containers, excluding racks, and not the entire refrigeration plant. The AAC directed the ITO to identify the parts of the plant covered by other sub-items and allow depreciation at 15% for those specific parts. The assessee challenged this decision, arguing that electrical motors, switchboards, and racks were integral parts of the plant as a whole, warranting a 15% depreciation rate for the entire plant. The assessee cited case law to support its claim, including a judgment from the Allahabad High Court. The Tribunal observed a discrepancy in the legislative language but relied on a Punjab and Haryana High Court decision to conclude that if electrical fittings were part of the refrigeration plant, the higher depreciation rate should apply. Therefore, the Tribunal directed the ITO to reconsider the claim based on these findings, setting aside the AAC's decision and allowing the higher depreciation rate under sub-item No. 13.

This judgment highlights the importance of correctly interpreting legislative provisions and case law in determining depreciation rates for specific assets. It emphasizes the need to consider the integral components of a plant or machinery when assessing depreciation claims, ensuring that the higher applicable rate is granted where justified. The Tribunal's decision provides clarity on the issue of depreciation rates for cold storage plants and machinery, aligning with the legislative intent and judicial precedent to uphold the assessee's claim for a higher depreciation rate under sub-item No. 13.