2006 (2) TMI 130 - HC - Income Tax

Depreciation - Whether Tribunal was right in allowing 100 per cent, depreciation on printing cylinders, sintex shipper ice box, MS bins which does not serve any purpose individually? - cost of each asset was not higher than Rs. 5,000. The printing cylinders are mainly used in the printing industry and the matter to be printed is screwed on to these cylinders and then prints are taken. Therefore these printing cylinders were being used as part of the plant. The MS bins are being used as individual items and each one of them is a plant as a single unit. The same is the case for shippers sintex ice boxes, as shippers sintex ice boxes are of different capacities and are used individually as per the requirements. So, each of these assets is a plant - Held that depreciation of 100 per cent, on printing cylinders, MS bins and shippers sintex ice boxes are eligible under the first proviso to section 32(1)(ii) of the Act, and each of these assets is a plant individually

Summary

Issues:
Whether 100% depreciation on printing cylinders, sintex shipper ice box, and MS bins is allowable under the Income-tax Act, 1961.

Analysis:
The judgment pertains to an appeal filed by the Revenue under section 260A of the Income-tax Act, 1961, challenging the decision of the Income-tax Appellate Tribunal, Madras, regarding the allowance of 100% depreciation on certain assets. The dispute centered around whether the assessee, engaged in hire-purchase, finance, and leasing, was entitled to claim full depreciation on printing cylinders, MS bins, and shipper sintex ice boxes, which were disallowed by the Assessing Officer during assessment under section 143(3) of the Act. The Assessing Officer's reasoning for disallowance was that the assets were leased in bulk, not individually.

The first appellate authority ruled in favor of the assessee, stating that each of the assets in question qualified as a plant and therefore eligible for 100% depreciation. Subsequently, the Income-tax Appellate Tribunal upheld the decision, emphasizing that each asset cost less than Rs. 5,000 and served individual purposes. The Tribunal found that printing cylinders were integral to the printing industry, MS bins were standalone units, and shipper sintex ice boxes were used based on specific requirements, thus qualifying as individual plants.

The judgment referenced precedents such as First Leasing Co. of India Ltd. v. CIT and CIT v. Alagendran Finance Ltd., where the courts held that assets functioning independently and not as part of an integrated unit were eligible for depreciation under the relevant provisions of the Act. Drawing from these decisions, the High Court concluded that the assets in question were individual plants eligible for 100% depreciation under the first proviso to section 32(1)(ii) of the Income-tax Act, 1961. The court found no error in the Tribunal's decision and dismissed the tax case, stating that no interference was required. The judgment did not award costs to either party.