Depreciation rule incorporates current central rates; pedestal fan cost allowed, but brochure expenditure failed as business deduction.

Depreciation on a pedestal fan used for business was allowable under the State agricultural income-tax framework because the rule incorporating central depreciation rates had to be read with the then-current Income-tax Act, 1961; a full-cost deduction could still constitute depreciation where the prescribed rate was 100%, and the claim succeeded. Expenditure on bringing out a Murugappa group brochure was not shown to be incurred for the assessee's own business, so it was correctly disallowed and that claim failed.

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Issues: (i) Whether depreciation on the cost of a pedestal fan purchased for business use was allowable under section 5(f) of the Tamil Nadu Agricultural Income-tax Act, 1955 read with rule 4(1) of the Tamil Nadu Agricultural Income-tax Rules, 1955. (ii) Whether the assessee was entitled to deduction of the expenditure incurred towards bringing out a brochure of the Murugappa group.

Issue (i): Whether depreciation on the cost of a pedestal fan purchased for business use was allowable under section 5(f) of the Tamil Nadu Agricultural Income-tax Act, 1955 read with rule 4(1) of the Tamil Nadu Agricultural Income-tax Rules, 1955.

Analysis: Section 5(f) permits depreciation of plant and furniture required for the purpose of deriving agricultural income, and rule 4(1) adopts the rates prescribed from time to time under the income-tax law then in force. Although the rule referred to the repealed Indian Income-tax Act, 1922, it had to be read as referring to the Income-tax Act, 1961, because the State rule incorporated the prevailing central depreciation rates. A plant item costing less than Rs. 5,000 attracted 100 per cent depreciation under section 32(1)(ii) of the Income-tax Act, 1961, and the fact that the deduction equalled the cost did not cease to make it depreciation.

Conclusion: The claim for depreciation on the pedestal fan was allowable and the assessee succeeded on this issue.

Issue (ii): Whether the assessee was entitled to deduction of the expenditure incurred towards bringing out a brochure of the Murugappa group.

Analysis: On the material placed, the brochure expenditure was not shown to be expenditure incurred for the assessee's own business. The Tribunal's view that the cost of bringing out the brochure could not be treated as part of the assessee's business expenditure was found to be correct.

Conclusion: The disallowance of the brochure expenditure was upheld and the assessee failed on this issue.

Final Conclusion: Relief was granted only on the depreciation claim relating to the fan, while the disallowance of the brochure expenditure remained undisturbed.

Ratio Decidendi: Where a State depreciation rule adopts the rates prescribed under the central income-tax law from time to time, the current central depreciation rate applies notwithstanding that the rule still mentions the repealed earlier Act, and a deduction equal to the full cost may still be depreciation.

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