Tribunal affirms 100% depreciation for items under Rs.5000, rejects revenue's 25% rate argument

The Tribunal upheld the allowability of 100% depreciation on individual items valued below Rs.5000 each, rejecting the revenue's argument that these items should be depreciated at the normal rate of 25% as part of a larger unit. The Tribunal considered each item to be a self-contained unit, supported by the assessee's treatment and original assessment. The decision distinguished a prior judgment cited by the revenue, leading to the dismissal of the appeal and affirming the eligibility of 100% depreciation for items below Rs.5000.

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Issues:
- Allowability of rate of depreciation to the assessee-Board.

Analysis:
The case involves an appeal by the revenue under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal regarding the allowability of depreciation at 100% on items valued below Rs.5000 each. The revenue contended that depreciation should be allowed at the normal rate of 25% as these items were part of a bigger unit. The Tribunal accepted the appeal, ruling that each item below Rs.5000 was a self unit and eligible for 100% depreciation.

The facts of the case state that the assessee claimed depreciation at 100% on switch gears, including cable connections, totaling Rs.39,68,74,587. The Assessing Officer disagreed, asserting that each asset was part of a bigger unit and should be depreciated at 25%. The Commissioner of Income Tax (Appeals) upheld this decision, but the Tribunal overturned it, allowing 100% depreciation on individual items below Rs.5000.

The main contention was whether the items below Rs.5000 each could be considered as separate units for depreciation purposes. The revenue argued that the total value of all items should determine depreciation, citing a Bombay High Court judgment. However, the Tribunal found each item to be a self unit and part of a bigger unit, justifying 100% depreciation.

The Tribunal's decision was supported by the fact that the items below Rs.5000 were treated as separate units by the assessee and allowed in the original assessment. The judgment cited by the revenue involved a different scenario where all expenditure for bringing assets into working condition was included in determining depreciation, unlike the present case. Consequently, the substantial question of law was answered against the revenue, and the appeal was dismissed.

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