Binding precedent upheld deduction and amortisation claims, while higher depreciation on factory electrical installations was refused.

Deduction under section 80HHC was allowed on book profits under section 115JB despite nil eligible profits under normal computation, because binding precedent covered the issue in the assessee's favour. Amortisation of share issue expenditure under section 35D was also allowed, following an earlier decision involving the same assessee for a prior assessment year. Higher depreciation at 25% on electrical installations was rejected; the court treated factory electrical installations as eligible only for the lower applicable rate and declined to interfere with the depreciation already granted. Relief was therefore granted to the assessee on the first two issues, while the depreciation issue was decided for the Department.

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Issues: (i) Whether deduction under section 80HHC could be allowed on the basis of book profits under section 115JB when eligible profits under normal computation were nil; (ii) whether expenditure incurred on issue of shares was eligible for amortisation under section 35D; (iii) whether higher depreciation at 25% was allowable on electrical installations.

Issue (i): Whether deduction under section 80HHC could be allowed on the basis of book profits under section 115JB when eligible profits under normal computation were nil.

Analysis: The issue was covered by binding precedent in favour of the assessee.

Conclusion: The issue was answered in favour of the assessee and against the Revenue.

Issue (ii): Whether expenditure incurred on issue of shares was eligible for amortisation under section 35D.

Analysis: The issue was covered by an earlier decision relating to the same assessee for the previous assessment year.

Conclusion: The issue was answered in favour of the assessee and against the Revenue.

Issue (iii): Whether higher depreciation at 25% was allowable on electrical installations.

Analysis: Electrical installations used inside the factory were treated as eligible only for the lower applicable rate, and the court declined to interfere with the depreciation rate already granted.

Conclusion: The issue was answered in favour of the Department and against the assessee.

Final Conclusion: The appeals were disposed of with relief granted to the assessee on the first two issues and the depreciation issue decided against the assessee.

Ratio Decidendi: Where a question is covered by binding precedent, it must be answered consistently with that precedent; electrical installations used inside the premises are not entitled to a higher depreciation rate than the applicable rate for that category.

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