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TMI Blog2022 (5) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... tchgear products it is evident that moulds, dies and tools are not independent of the plant and machinery, but are parts of the machinery. Once they are worn out, the machines cannot turn out the product to the business specifications and this has to be obtained only on a replacement of the tools or the dies and moulds. Further also, in assessee s own case in the subsequent years, the revenue has allowed the claim of additional depreciation on these tools etc. and thus the ground raised in the appeal is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... repreneurs to set up new manufacturing establishments. The language of the section 'In the case of any new machinery or plant which has been acquired and installed after the 31st day of march, 2005" intends set up of new plant and not moulds and dies addition / renovation or repair to the old plant. Further, the assessee has made addition of tools which cannot be treated as installation of plant and machinery". 3.2 The assessee went in appeal before CIT(A) raising grounds that certain amendments were made regarding additional depreciation by Finance Act, 2005. Kind attention is invited to para 3.6 of the explanatory notes on the provisions of the Finance Act, 2005- Circular No. 3/2006 dated 27.02.2006 which states as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of actual cost shall be allowed. Further, from A.Y. 2013-14 the same is also allowed to assessee engaged in the business of generation or generation and distribution of power, where the depreciation is provided on WDV method as per Appendix I. Further, from assessment year 2017-18 the same is also allowed to the assessee engaged in the business of transmission of power. Further, where the asset is used for less than 180 days then 50% depreciation i.e, 1/2 of 20% (i.e.10%) is available (Balance 50% of Additional Depreciation can be claimed in next year) Further, no such additional deduction will be allowed in respect of machinery or plant- 1. Used by any other person in India or outside India before its installation. 2. Installed in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept the contention of the appellant's AR. The acquisition of new tools, can, by no stretch of imagination be held as equivalent to acquisition of new plant and machinery. The tools are acquired so as to enhance the life of an existing plant and machinery. Whenever a new plant and machinery is acquired, any tools which are integral and inseparable part of such new plant and machinery are certainly eligible for additional depreciation. However, acquisition of tools for an existing plant and machinery do not qualify for additional depreciation. Accordingly, the claim of additional depreciation made by the appellant is held as an incorrect claim and accordingly the disallowance of additional depreciation, made by the AO is upheld." 5. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been allowed By CIT(A). 5.3 The ld. DR submitted that the ld. Tax Authorities below have passed reasoned orders with which he stands by. 6 Appreciating the matter on record and contentions of counsel it can be observed that Hon'ble Supreme Court of India in Scientific Engineering House (P) Ltd. case has relied the following functional test as laid by House of Lords in IRC v. Barclay, Curie & Co. Ltd. [1970] 76 ITR 62 : "..In order to decide whether a particular subject is an 'apparatus' it seems obvious that an enquiry has to be made as to what operation it performs. The functional test is, therefore, essential at any rate as a preliminary…" "In other words, the test would be : Does the article fulfil the function of a pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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