Special depreciation rate for artificial silk machinery applies to plant used in manufacture, not only machinery made for that purpose.

Depreciation under section 32 was governed by the rate prescribed in Rule 5 of the Income-tax Rules, and Entry III-B(3) in Appendix I, Part I provided a special 15% rate for machinery and plant used in the manufacture of artificial silk, excluding wooden parts. That entry was construed as applying to machinery and plant employed in the manufacturing process itself, not only to machinery manufactured for producing artificial silk. On that construction, the assessee was entitled to the special depreciation rate, and the Tribunal's denial of the allowance was incorrect.

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Issues: Whether the assessee was entitled to depreciation at 15% on plant and machinery used for manufacturing artificial silk under Entry III-B(3) of Appendix I, Part I of the Income-tax Rules, 1962.

Analysis: Depreciation under Section 32(2) of the Income-tax Act, 1961 is allowable at the percentage prescribed by Rule 5 of the Income-tax Rules, 1962. Entry III-B(3) in Appendix I, Part I provides a special rate for artificial silk manufacturing machinery and plant except wooden parts. That entry could not be read as applying only to machinery manufactured for producing artificial silk, and not to machinery and plant used in the manufacture of artificial silk itself.

Conclusion: The assessee was entitled to depreciation at 15% under Entry III-B(3), and the Tribunal was wrong in denying that allowance.

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