9911796707
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Issues:
1. Interpretation of "new machinery" for investment allowance. 2. Allowance of depreciation on motor cars. Interpretation of "new machinery" for investment allowance: The appeal concerned the assessment year 1978-79 and disputed the classification of re-conditioned machinery as 'new machinery' eligible for investment allowance. The assessee claimed investment allowance for rolling mill machinery made from secondhand parts. The Income Tax Officer (ITO) rejected the claim, stating that investment allowance was only applicable to new machinery. On appeal, the Commissioner (Appeals) directed the ITO to allow the deduction based on the argument that the machinery, though made from old parts, was brought into existence for the first time, thus qualifying as new machinery. The Commissioner (Appeals) relied on interpretations of the term 'new' from Income-Tax Law literature. The Tribunal agreed with the Commissioner (Appeals), citing a Supreme Court decision that 'new' means 'not existing before, now made or brought into existence for the first time.' The Tribunal concluded that the machinery, though made from old parts, was new as it had not existed before, and upheld the Commissioner (Appeals) decision, dismissing the revenue's appeal on this ground. Allowance of depreciation on motor cars: The second issue revolved around the allowance of depreciation on motor cars. The Commissioner (Appeals) directed the ITO to allow the depreciation claim following a decision of the Madras High Court. The revenue appealed this decision, arguing that since the assessee used old and secondhand parts to manufacture the rolling mill machine, it did not qualify as new machinery for investment allowance. The Tribunal considered the manufacturing process involved in creating the rolling mill machine, including various materials and processes used. The Tribunal agreed with the Commissioner (Appeals) and upheld the decision to allow the depreciation claim on motor cars. Since the revenue did not present any contrary decision to challenge the Madras High Court decision cited by the Commissioner (Appeals), the Tribunal dismissed the revenue's appeal on this ground as well.
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