Tribunal Grants 30% Depreciation on Moulds, Upholds Excise Duty Deduction Under Section 37, Favoring Assessee.

The Tribunal ruled in favor of the assessee on both issues. For the first issue, it directed the Assessing Officer to allow a 30% depreciation on moulds used in manufacturing plastic and rubber goods, overturning the Commissioner's decision to restrict it to 15%. On the second issue, the Tribunal upheld the Commissioner's decision to treat excise duty not recovered from sales as a deductible expense under Section 37, dismissing the Revenue's appeal. Thus, the assessee's appeals were allowed, and the Revenue's appeal was dismissed.

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Issues:
1. Disallowance of excess depreciation claimed on moulds.
2. Addition of excise duty not recovered from sales.

Issue 1: Disallowance of excess depreciation claimed on moulds

The assessee appealed against the disallowance of Rs. 1,89,44,933/- by the Commissioner of Income-tax (Appeals) regarding excess depreciation claimed on moulds. The Assessing Officer restricted the depreciation to 15% as the moulds were not used exclusively in rubber and plastic factories. The Tribunal noted a similar case where depreciation was allowed at a higher rate for moulds used in plastic goods manufacturing. The Tribunal held that the assessee, as the owner of the moulds used for manufacturing plastic and rubber goods, was entitled to claim depreciation at 30%. The Tribunal set aside the Commissioner's order and directed the Assessing Officer to allow the depreciation at 30%.

Issue 2: Addition of excise duty not recovered from sales

The Revenue challenged the deletion of the addition made by the Assessing Officer in respect of excise duty not recovered from sales amounting to Rs. 9,30,00,000/-. The Assessing Officer disallowed the claimed expense on the grounds of availing double benefit through CENVAT/MODVAT credit and excise duty claim. However, the Commissioner of Income-tax (Appeals) allowed the appeal, stating that excise duty not recovered from sales is a tax deductible item under Section 37 of the Act. The Tribunal upheld the Commissioner's decision, emphasizing that CENVAT/MODVAT and excise duty are distinct items and the excise duty not recovered from sales is a deductible expense. Consequently, the Revenue's appeal was dismissed, and the assessee's appeal was allowed.

This judgment addresses the issues of disallowance of excess depreciation on moulds and addition of excise duty not recovered from sales. The Tribunal ruled in favor of the assessee in both matters, allowing the claimed depreciation at 30% for the moulds and recognizing the excise duty not recovered from sales as a deductible expense under Section 37 of the Act.

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