Tribunal Upholds 10% Depreciation for Tubewells as Plant & Machinery

The Income-tax Tribunal upheld the depreciation rate of 10% for tubewells, considering them as plant and machinery essential to the manufacturing process, denying the petitioner's request for a referral on this issue. The Tribunal allowed weighted deduction under section 35B for sea freight and insurance charges but rejected it for bank interest and other expenses, citing previous decisions. The issue of weighted deduction on bank interest and forwarding charges was dismissed as no referable question of law was identified, with no costs awarded.

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Issues:
1. Depreciation rate on tubewells.
2. Weighted deduction under section 35B on specific expenses.
3. Allowance of weighted deduction under section 35B on bank interest and forwarding charges.

Analysis:

Issue 1: Depreciation rate on tubewells
The petitioner sought a direction for the Income-tax Tribunal to refer questions of law regarding the depreciation rate on tubewells. The Assessing Officer initially allowed depreciation at 5%, treating the tubewell as part of the building. However, the Commissioner of Income-tax (Appeals) and the Tribunal both held that the tubewell should be considered as plant and machinery, entitling depreciation at 10%. The Tribunal noted that the specific rate of 5% for tubewells was introduced in 1983, not applicable to the assessment year 1978-79 in question. Additionally, it was found that the tubewell was integral to the manufacturing process of the assessee. Consequently, the Tribunal rightly declined to refer this question.

Issue 2: Weighted deduction under section 35B on specific expenses
The second issue involved the allowance of weighted deduction under section 35B on various expenses, including sea freight, insurance charges, and bank interest. The Commissioner of Income-tax (Appeals) and the Tribunal allowed the deduction on sea freight and insurance charges but rejected it on other expenses. The Tribunal cited a previous judgment in the assessee's case, stating that the issue was already covered by the jurisdictional High Court's decision. Therefore, the Tribunal correctly declined to refer this issue for the court's opinion.

Issue 3: Allowance of weighted deduction on bank interest and forwarding charges
The final issue pertained to the allowance of weighted deduction under section 35B on bank interest and forwarding charges. Both parties agreed that this issue did not arise from the Tribunal's order, and no referable question of law was identified. Consequently, the Tribunal dismissed this issue, stating that no costs were to be awarded.

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