Depreciation on diesel generating set upheld at 15% where higher renewable energy device rate applied, defeating section 263 restriction.

Diesel generating set depreciation was treated as eligible at 15% rather than 10% in section 263 proceedings under the Income-tax Act, 1961. The Tribunal relied on earlier and later assessments allowing 15% depreciation and on its prior view that a diesel generating set falls within the relevant renewable energy device entry. As the assessee confined its claim to 15% despite prior decisions indicating a higher rate, the Commissioner's restriction to 10% was not accepted, and the 15% depreciation claim was upheld with the section 263 order set aside.

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Issues: Whether the diesel generating set was entitled to depreciation at 15% instead of 10% in proceedings under section 263 of the Income-tax Act, 1961.

Analysis: The Tribunal noted that earlier and subsequent assessments had allowed depreciation at 15% and relied on its own prior decisions holding that a diesel generating set falls within the relevant renewable energy device entry and is eligible for a higher rate of depreciation. Although those decisions indicated a still higher rate, the assessee confined its claim to 15% on the facts of the case. The Commissioner's direction restricting depreciation to 10% was therefore not accepted.

Conclusion: The depreciation claim at 15% was upheld and the assessee succeeded; the order passed under section 263 was set aside.

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