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COMMISSIONER OF INCOME TAX-I, BARODA Versus ALEMBIC CHEMICAL WORKS CO. LTD

2016 (6) TMI 562 - GUJARAT HIGH COURT

Allowability of depreciation - whether the Appellate Tribunal was right in allowing the depreciation disallowed on Pollution Control Equipments interpreting the word “being” used in Appendix-I of the I.T.Rules as illustrative in nature, ignoring the fact that the assets eligible for depreciation @ 100% are specifically included under the head “Water Pollution Control Equipments” and that except the assets mentioned in (IA), (2) and (3) of Item No.III of Appendix-A, the remaining Plants & Machine .....

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w of this, the view taken by the Tribunal is correct and the question posed for our consideration is answered against the department and in favour of the assessee and it is held that the depreciation allowed by the Tribunal is just and proper and no interference is called for in the present appeal. - Decided against revenue. - TAX APPEAL NO. 1147 of 2005 - Dated:- 7-6-2016 - MR. KS JHAVERI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MR KM PARIKH, ADVOCATE FOR THE OPPONENT : MR SOPARKAR, ADVOCAT .....

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law. Whether, on facts and in the circumstances of the case and in law, the Appellate Tribunal was right in allowing the depreciation disallowed on Pollution Control Equipments interpreting the word being used in Appendix-I of the I.T.Rules as illustrative in nature, ignoring the fact that the assets eligible for depreciation @ 100% are specifically included under the head Water Pollution Control Equipments and that except the assets mentioned in (IA), (2) and (3) of Item No.III of Appendix-A, .....

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. (i) Pollution Control Equipments: Addition to the pollution control equipments is shown to the tune of ₹ 4,73,69,089/-. All the additions is shown in the second half of the year where the assets are used for less than 180 days. Depreciation on these assets is claimed 100%. Perusal of the details revealed that the items which are treated by the assessee as pollution control equipment, do not fit in the block of 100% depreciation as per IT rules. In the light of depreciation chart given in .....

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Appendix-I of Rule-5 of I.T.Rules, 1962. According to the report of General Manager (Technical) assets worth ₹ 3,62,16,971/- are covered in the block of 100% depreciation out of total addition of ₹ 4,73,69,089/- shown by the assessee as pollution control equipment. It is also mention in the report that other equipment and machineries etc. which are thought not strictly covered in 100% block of IT rules but they function with main plant. I have gone through the report of General Mana .....

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quipment but they are not called pollution control equipment as per IT rules on which 100% depreciation is allowable. In view of above, depreciation on rest of the plant and machineries is allowed @ 25% and excess depreciation is calculated as under:- Depreciation claimed @ 50% on Rs.1,11,52,118/- = Rs.55,76,059/- Less: Depreciation allowable 12.5% of above = Rs.13,94,014/- Excess Depreciation = Rs.41,82,045/- Thus, excess depreciation claimed on pollution control equipment of ₹ 41,82,045/ .....

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termine the extent of machineries out of the above eligible for 100% depreciation. The appellant produced the report of Shri J.J.Chaudhary, General Manager (Technical). As per the above report, machinery, assets worth ₹ 3,62,16,971/- are covered in the block of 100% depreciation out of the total machinery above. The assessing officer has allowed the depreciation as per the above report. 13.1 The authorised representative of the appellant has submitted that though the balance machineries ar .....

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bove report. Now the appellant comes with the plea that the balance machinery, though not covered under the block of 100% depreciation but the same should be allowed because this machinery is also functions with the equipments where 100% depreciation is allowable. I do not agree with the appellant. Disallowance is upheld. 2.2 Thereafter, he took us through the reasoning adopted and the judgment sought to be relied upon by the Tribunal rendered by Madhya Pradesh High Court in the case of CIT v. S .....

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the opinion in part and it should be accepted as a whole. He further submitted that the argument that since some of the equipments are not mentioned under the head, Water Pollution Control Equipments , the Tribunal could not have allowed depreciation on such Pollution Control Equipments. In support of his submission, he has relied upon the decision of this Court in Gujco Carriers v. Commissioner of Income Tax reported in 256 ITR 50, wherein it is observed as under:- Held accordingly, that the m .....

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