Commissioner of Income Tax, Agra vs Romsons Junior India

The income tax Appellate Tribunal, Delhi, has referred following questions of law u/s 256(2) of the income tax Act, 1961 (hereinafter referred to as ''the Act'') for opinion to this Court :

"1. Whether, on facts and in the circumstances of the case, The Tribunal was right to hold that the assessee was entitled to depreciation at the rate of 20 per cent in respect of generator as against 15 per cent allowed by the revenue ?

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law to hold that the generator was part of the machinery and plant for the manufacture of medical equipment and that subject to other conditions being satisfied, assessee was entitled to deduction on account of investment allowance u/s 32A ?"

The reference relates to the assessment years 1986-87 and 1987-88, while the first question is common to both the assessment years. The second question is confined to the assessment year 1986-87 only.

We have heard Shri A.N. Mahajan, learned standing counsel for the revenue. No body has appeared on behalf of the respondent/assessee.

It has been stated by Sri A.N. Mahajan, learned standing counsel that this Court in CIT v. Indian Metal Industries [IT Reference No. 204 of 1988, decided on 7-12-2004] has held that the depreciation at the rate of 10 per cent alone is admissible in respect of generator. In this view of the matter, the Tribunal was not justified in holding that the respondent/assessee is entitled to depreciation at the rate of 20 per cent on the generator. We, accordingly, answer the first question in the negative, i.e., in favour of the revenue and against the assessee. So far as the second question is concerned, we find that this Court in Commissioner of Income Tax Vs. Raj Vijay Corporation, has held that the generator is part of the machinery and plant and, therefore, entitled for investment allowance u/s 32A of the Act. Respectfully following the aforesaid decision we answer the second question in affirmative i.e., in favour of the assessee and against the revenue. However, the parties are left to bear their own costs.