Higher depreciation for machinery may apply where corrosive chemicals in the material wear down equipment, with remand for fresh evidence.

Machinery used in sugar manufacture may qualify for higher depreciation under the entry for machinery coming into contact with corrosive chemicals if the material passing through it contains chemicals capable of corroding and wearing down the machinery; direct contact with a pure corrosive chemical is not required. The Court accepted the assessee's construction of the depreciation entry, but found the record insufficient for technical findings on whether the machinery in question met that test. The matter was remanded for fresh evidence and reconsideration after giving both sides an opportunity to adduce material on the point.

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Issues: Whether machinery used in sugar manufacture was entitled to higher depreciation under the entry for machinery coming into contact with corrosive chemicals, and whether further evidence was required before deciding the claim.

Analysis: The entry was construed as referring to machinery exposed to chemicals having a corrosive effect, not only to pure corrosive chemicals in isolated form. It was held that the relevant enquiry was whether what passed through the machinery contained chemicals capable of corroding and wearing down the machinery, thereby reducing its effective life. Since the record did not contain adequate basis for technical findings on that question, further evidence was necessary, with opportunity to both sides, before the entitlement to higher depreciation could be determined.

Conclusion: The assessee's construction of the depreciation entry was accepted, and the matter was remanded for fresh evidence and reconsideration.

Ratio Decidendi: For the purpose of the higher-depreciation entry, it is sufficient if the machinery comes into contact with material containing corrosive chemicals having a corrosive effect on the machinery; contact with a pure corrosive chemical is not required.

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