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TMI Blog1980 (1) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed depreciation at the rate of 10% for the assessment year 1966-67. The ITO was of the view that the correct depreciation allowable under the rules was only 7%. He, therefore, worked out the depreciation accordingly and granted it. On appeal, the AAC accepted the assessee's contention that the entire machinery was run under electric power and that it should be considered as electrical machinery within the scope of r. 5 of the I.T. Rules read with App. I to the Rules. The ITO appealed to the Tribunal which found that the machines were offset print. ing machines used in litho works and that the proper rate of depreciation would be 10 per cent. The question referred as arising out of this order of the Tribunal runs as follows : " Whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Entry III(iii) E-3(b) of Column I of Part I of Appendix I to the Income-tax Rules, 1962, and that, therefore, the assessee was entitled to depreciation in respect of these machinery at 10 per cent. ? (2) Whether the Tribunal's view that any machinery which runs on electricity would constitute ' other electrical machinery ' under Entry III(iii) E-3(b) of the Income-tax Rules, 1962, is sustainable in law? " In T.C. No. 1237 of 1079, the assessee claimed depreciation at 10 per cent. on the offset printing machinery. Without giving any reasons the ITO allowed depreciation only at 7 per cent. The AAC, on appeal, held that then items were all fully embedded with highly sophisticated electrical devices and they were also operated by ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and certain special rates are to be applied to the whole of the machinery and plant used in certain concerns, for instance, in aerating gas factories the special rate of depreciation is 9 per cent., in the case of aluminium factories it is IO per cent., and so on. Electrical engineering works is a special category for which 10 per cent. was prescribed. There is another category under the heading " Special rates to be applied to other machinery and plant ". In this category, the particular types of machines are brought under alphabetical headings. Under the alphabetical heading 'E' the broad categories are as follows : (1) Earth moving machinery employed in, heavy construction works such as dams, tunnels, canals, etc. (2) Electric supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to agree with this submission because electric supply' undertakings have been separately dealt with under the main entry (2) under the alphabetical head, " E ". No purpose is served by repeating the same machinery in another heading. Therefore, item (b) above referring to " other electrical machinery " must necessarily be some other machinery than machinery used in electric supply undertakings. The extreme contention urged on behalf of the assessee is that any machinery which is run by electricity could be " other electrical machinery ". We are unable to accept this submission either. The expression " electrical machinery " cannot be taken to mean " machinery which is driven by electricity or whose motive power is electricity ". There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a vital and inseparable part of it, then the machinery would be electrical machinery. We find that in all these cases the ITO rejected the assessee's claim without practically giving the details of the nature of the machinery possessed by the assessee. The AAC accepted the assessee's claim and the Tribunal confirmed it. The result was that there has been practically no proper investigation of the nature of the machinery under consideration in respect of which higher rate of depreciation is claimed. In the circumstances, in the absence of proper details of the nature of the machinery, we are obliged to return the references unanswered. The Tribunal may get the necessary materials from the assessee and then proceed to dispose of the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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