Plastic goods factory depreciation rate upheld for moulds used in manufacturing predominantly plastic switches and sockets.

Moulds used to manufacture electric switches and sockets made predominantly of plastic qualified for 30% depreciation under the entry for moulds used in rubber and plastic goods factories. The court treated the factory as a plastic goods factory because the essential character of the products remained plastic, and the later insertion of electrical circuits and wires did not change that character. Accordingly, the higher depreciation rate applied to the moulds, and the assessee's claim was upheld against the Revenue.

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Issues: Whether moulds used for manufacturing electric switches and sockets made predominantly of plastic were entitled to depreciation at 30% as moulds used in a rubber and plastic goods factory under the relevant depreciation schedule.

Analysis: The applicable entry in Appendix I to Rule 5 of the Income-tax Rules, 1962 prescribed 30% depreciation for moulds used in rubber and plastic goods factories, while residual items attracted 15%. The assessee manufactured switches and sockets from plastic components, and the fact that electrical circuits and wires were later inserted did not alter the essential nature of the products. Since the moulds were used in the manufacture of plastic goods, the factory was treated as a plastic goods factory for the purpose of the depreciation entry.

Conclusion: The assessee was entitled to depreciation at 30% on the moulds.

Final Conclusion: The question of law was answered against the Revenue and the depreciation claim at the higher rate was upheld.

Ratio Decidendi: Where moulds are used in the manufacture of goods whose essential character is plastic, the factory falls within the relevant depreciation entry for rubber and plastic goods factories and the higher rate of depreciation applies.

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