Commissioner of Income Tax vs Transpek Industry Ltd.

D.A. Mehta, J.—This is the reference at the instance of the Revenue u/s 256(1) of the income tax Act, 1961 ("the Act"). The following question of law has been referred to us by the income tax Appellate Tribunal, Ahmedabad Bench "C", for the assessment year 1983-84: Whether, the Appellate Tribunal is right in law and on facts in directing the Inspecting Assistant Commissioner to allow depreciation at the rate of 15 percent on diesel generating set?

The assessee, a limited company, claimed depreciation at the rate of 15 percent on diesel generating set stating that the same was a part and parcel of the same machinery which was owned and used by the assessee. It was further stated by the assessee that the plant and machinery came in contact with corrosive chemicals and all other plant and machinery were allowed depreciation at the rate of 15 percent and hence the diesel generating set, which was a part of the same machinery, was also entitled to depreciation at the rate of 15 percent. The Assessing Officer granted the claim of the assessee.

However, the Commissioner of income tax, taking revisional action u/s 263 of the Act, restricted the deduction of depreciation to the rate of 10 percent holding that every assessment was distinct and independent. The assessee carried the matter in appeal before the Tribunal and the Tribunal referred to the decisions of the Ahmedabad Bench and Jaipur Bench of the Tribunal and found that such machinery, namely, generating sets, was entitled to depreciation at the rate of 30 per cent, the assessee had restricted its claim to deduction at the rate of 15 percent and hence the same was allowable.

We have heard Mr. M.R. Bhatt, learned senior standing counsel appearing on behalf of the applicant-Revenue. Though served, none appears on behalf of the respondent.

It is pertinent to note that over and above reliance on the different Benches of the Tribunal, in the present case, the Tribunal has also taken note of the fact that depreciation had been allowed on the same machinery at the rate of 15% to the assessee for all the preceding assessment years and also subsequent years. In our opinion, in light of this peculiar factual position, it is not necessary to interfere with the finding recorded by the Tribunal and we hold that the Tribunal was justified in law in directing the Assessing Officer to allow depreciation at the rate of 15 percent on the diesel generating set. The question referred to us is, therefore, answered in the affirmative, i.e., in favour of the assessee and against the Revenue. Reference stands disposed of accordingly with no order as to costs.