2019 (4) TMI 362 - AT - Income Tax

Depreciation on electrical equipment - @ 15% OR 10% - electrical equipment vs electrical fittings - HELD THAT - Equipments are part and parcel of the plant and machinery and, therefore, eligible for depreciation @ 15%. We, accordingly, direct the AO to allow deprecation @ 15% on the electrical equipment.

Summary

Issues involved: Claim of depreciation on electrical equipment at 15% vs. disallowance at 5% by Assessing Officer.

Analysis:
1. The appeal was against the Commissioner of Income Tax [Appeals] - 2, New Delhi's order for the assessment year 2009-10. The primary grievance was the disallowance of depreciation on electrical equipment at 5% instead of the claimed 15%.

2. The Assessing Officer allowed depreciation on electrical fittings at 10% instead of the claimed 15% by the assessee. Subsequently, both depreciation on electrical fittings and equipment were disallowed. The assessee's rectification application under section 154 of the Income-tax Act, 1961 was dismissed.

3. The contention was that electrical equipment is integral to the plant and machinery, thus eligible for depreciation at 15%. The details of the electrical equipment were presented, demonstrating their classification and suppliers.

4. Upon examining the details provided, the Tribunal concluded that the electrical equipment indeed formed part of the plant and machinery, warranting depreciation at 15%. Consequently, the Assessing Officer was directed to allow depreciation at the claimed rate.

5. The Tribunal allowed the appeal, emphasizing the eligibility of the electrical equipment for depreciation at 15%. The decision was pronounced on 03.04.2019, in favor of the assessee.

This detailed analysis highlights the core issue of depreciation claim on electrical equipment, the discrepancies in the Assessing Officer's disallowance, and the Tribunal's decision in favor of the assessee based on the equipment's classification as part of the plant and machinery.