TUFS machinery depreciation: embroidery machines treated as eligible for higher tax depreciation under the rules.

Machinery purchased under the Textiles Upgradation Fund Scheme and used for embroidery work was treated as eligible for higher depreciation at 50% under the relevant depreciation entry in Appendix I to the Income-tax Rules. The Tribunal examined the TUFS resolution, departmental circulars and certificates indicating that fabric embroidery machines were covered by the scheme, and followed earlier coordinate bench rulings on identical facts in the absence of any contrary jurisdictional or higher court decision. On that basis, the machinery was held to fall within the TUFS-based depreciation category, and the Revenue's objection failed.

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Issues: Whether the assessee was entitled to higher depreciation at 50% on machinery purchased under the Textiles Upgradation Fund Scheme and used for embroidery work in the textile industry.

Analysis: The higher depreciation claim was examined with reference to paragraph 6 of Part A-III of Appendix I to the Income-tax Rules, the Ministry of Textiles resolution governing TUFS, and the departmental circulars and certificates showing that fabric embroidery machines were treated as covered under the scheme. The Tribunal also relied on earlier coordinate bench decisions on identical facts, and held that in the absence of any contrary decision of the jurisdictional Bench or a higher court, judicial discipline required following those decisions. On the facts, the assessee's machinery was treated as falling within the TUFS-based depreciation entry.

Conclusion: The assessee was entitled to higher depreciation at 50%, and the Revenue's challenge failed.

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