9911796707
|
Home
Issues:
Whether the assessee is entitled to initial depreciation under section 32(1)(vi) on the written down value of the plant and machinery used for manufacturing steel wires. Analysis: The dispute in this case pertains to the assessment year 1976-77, where the assessee claimed initial depreciation on plant and machinery used for manufacturing steel wires. The assessee's contention was based on the interpretation of item No. 1 of "Iron and steel (metal)" in the Ninth Schedule to the Income-tax Act, 1961. The Income-tax Officer initially disallowed the claim, but the Commissioner of Income-tax (Appeals) directed the allowance of initial depreciation under section 32(1)(vi) based on relevant case laws. The Tribunal upheld the Commissioner's decision, citing judgments from the Kerala, Madras, and Punjab and Haryana High Courts, which interpreted similar provisions favorably for the assessee. The Tribunal also applied the principle that in case of ambiguity in a taxing provision, the interpretation beneficial to the taxpayer should be adopted, as held by the Supreme Court in a relevant case. The Tribunal's analysis focused on whether steel wires manufactured by the assessee fell within the scope of 'iron and steel (metal)' as per the relevant schedule of the Act. Referring to judgments from the Kerala High Court, it was established that the addition of the word 'metal' did not limit the scope of the entry, and items produced from iron and steel could still qualify. The Tribunal also considered decisions from the Madras High Court and Punjab and Haryana High Courts, which supported the interpretation that items manufactured from iron and steel qualified for development rebates. By following these precedents, the Tribunal upheld the initial depreciation claim of the assessee, rejecting the contrary view of the Calcutta High Court and emphasizing the need to adopt a taxpayer-friendly interpretation in case of ambiguity. In conclusion, the High Court concurred with the Tribunal's analysis and decision, ruling in favor of the assessee and against the Revenue. The judgment emphasized the importance of interpreting tax provisions in a manner that benefits the taxpayer in case of ambiguity. The reference was disposed of accordingly, upholding the assessee's entitlement to initial depreciation on the plant and machinery used for manufacturing steel wires.
|
