1999 (3) TMI 3

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..... The judgment of the court was delivered by S. P. BHARUCHA J.--- Under appeals are the judgments and orders of the Division Benches of the Punjab and Haryana High Court (see [1982] 136 ITR 758). The assessment years involved are the assessment years 1970-71 to 1977-78. The High Court answered in the negative and in favour of the Revenue the following question : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the words 'corrosive chemicals' employed in entry (ii)B(7) of Para III of Part I of Appendix I to the Income-tax Rules, 1962, contemplates not only free chemicals but also non-free chemicals of corrosive effect ?" The assessee is in appeal. The assessee manufactures, a .....

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..... Commissioner dismissed the assessee's appeal. His view was that depreciation was allowable at the higher rate on such plant and machinery in which chemicals with high corrosive potential were used for manufacturing purposes and the manufacture of sugar did not fall in such category. The Income-tax Appellate Tribunal disagreed. It noted that the only criticism directed against the statement which had been tendered by the assessee before the Income-tax Officer was that it included machinery that came in contact, not with corrosive chemicals, but with cane juice and molasses, which were not corrosive chemicals but, at best, corrosive materials. The Tribunal found no force in this criticism for the reason that the corrosive chemicals contempl .....

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..... t was of the view that further material was required, the appropriate course was to require the Tribunal to take further evidence and draw up a supplemental statement of case. This apart, there appears to be some misunderstanding of what the said entry is intended to convey. Depreciation at a higher rate is allowed to machinery that comes into contact With corrosive chemicals. Corrosive chemicals corrode the machinery. They erode and, by reason of such erosion, the life of the machinery is truncated. To compensate, depreciation is allowed, at a higher rate. It is not intended that the machinery must come into contact with a pure corrosive chemical. It is enough that what passes through the machinery contains chemicals which are corrosive .....

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