TaxTMI 
TaxTMI 
2013 (9) TMI 801
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....d unit to be an expansion of the first unit and the so called second unit is located at the same site and have the same boundary wall. (iii) The Ld. CIT(A) has erred in allowing the appeal of the assessee and considering the 'Fly Ash Handling System' as Pollution Control Equipment instead of Plant & Machinery and consequently allowing higher rate of depreciation when the fact of the manufacturing process reveal that the same is used for handling the raw material 'Fly Ash ' and is an integral part of the composite plant. (iv) The Ld. CIT(A) has erred in allowing the appeal of the assessee and considering the Electrical Installation as Plant & Machinery instead of Furniture & Fixture relying on the assessment order for the AY 2005-06 and consequently allowing higher rate of depreciation , when the assessee failed to adduce evidence in support of Electrical Installation being Plant & Machinery and when the assessment order for the A. Y. 2005-06 is pending for disposal u/s.263 of the I.T. Act, 1961 inter alia on the issue of depreciation." 3. Shri Ranadhir Gupta, CIT (DR) represented on behalf of the revenue and Shri A.K. Tulsi....
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.... considered as a pollution control equipment. It was the submission that the order of the ld. CIT(A) holding the same as pollution control equipment was liable to be reversed. 7. In reply the ld. AR submitted that fibres were manufactured by the use of fly ash and the said fibres namely asbestos fibres is a health hazard. It was the submission that the ld. CIT(A) in page-6 at para 4 of his order had extracted the detailed submission of the assessee which categorically showed the necessity of installing the said equipment which was for the purpose of controlling pollution. It was the further submission that the equipment had been installed as per the recommendations of the Pollution control Board. The ld. AR drew our attention to the depreciation table wherein under the column Air pollution control in Item No.(viiie) it has been mentioned that the "ash handling system and evacuation system" was entitled to 100% depreciation. It was submitted that the equipments have been installed for the purpose of controlling the possibility of the pollution caused by the asbestos fibres suspended in the air as the same was having a weight of less than 100th of the weight of air. It was the sub....
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....andling system which is a part of the plant and machinery used in the manufacturing process. Coming to the submission that the same is a pollution control equipment as specified in depreciation table. It is noted that the wordings used in the said table is "ash handling system and evacuation system". The two terms ash handling system and evacuation system is to be read together. This would mean that what is treated as air pollution control equipment eligible for 100% depreciation is a system where the ash that is generated is removed from the premises or evacuated from the premises. It means that the ash has been generated on account of the manufacturing process which has resulted in the creation of the air pollution and such pollution being the ash has to be handled and evacuated. The system which does such handling of the pollutant ash and the evacuation of the same is what is eligible for 100% depreciation. In the assessee's case the use of the system is not ash handling and evacuation. The system in place in the assessee's case is for handling the fly ash and the asbestos fibres which are raw materials and which are health hazards and which not a pollution as a result of the ma....
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....d allowing depreciation accordingly as was claimed by the assessee. 2. That in the facts and circumstances of the case and in law the learned CIT(A) erred in allowing 100% depreciation on Fly Ash Handling System by considering it as "pollution control equipment" instead of "plant & machinery ". 3. That the Department craves leave to add, modify or alter any of the ground(s) of appeal and/or adduce additional evidence at the time of hearing of the case. " 14. In ITA No.l669/Kol/2011 the revenue has raised the following grounds: "1. That in the facts and circumstances of the case and in law, the ld. CIT(A) has erred in considering the items of electrical equipment as "Plant & machinery" instead of "furniture & fixture " and allowing depreciation accordingly as was claimed by the assessee. 2. That in the facts and circumstances of the case and in law the learned CIT(A) erred in allowing 200% depreciation on Fly Ash Handling System by considering it as "pollution control equipment" instead of "plant & machinery ". 3. That in the facts and circum....
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....issue and he does not see any point in further discussions on the issue. Learned brother has already dictated his order in the open court and he has proceeded with the stand that he has taken. Since I am not in agreement with the views of my learned brother, and since my persuasive skills have failed to convince my brother of correctness of my view, I proceed to dictate my separate order on this issue. 2. This ground of appeal, raised by revenue against the order of learned CIT (A), is that "that the learned CIT(A) has erred in allowing the appeal of the assessee and considering the 'fly ash handling system' as pollution control equipment instead of plant and machinery and consequently allowing higher rate of depreciation whereas the fact of manufacturing process reveals that the same is used for handling raw material 'fly ash' and is integral part of the composite plant". It requires our adjudication on the question whether or not the learned CIT(A) was justified in holding that "Fly Ash Handling System" was required to be treated as Pollution Control Equipment for the purpose of granting depreciation under Item III 3 (viii) of Depreciation Rules as against A.O's finding that t....
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.... brief observation made by the Assessing Officer on this issue, it is highlighted that fly ash is one of the raw materials and, therefore, fly ash handling system is plant and machinery. However, even as this observation was made, the Assessing Officer did not question assessee's submissions to the effect that the Fly Ash Handling System does control the pollution. 5. In my considered view there is no conflict between the Fly Ash Handling System being a pollution control device and also being a part of plant and machinery. A plain reading on the depreciation table shows that under the scheme of categories of assets for depreciation, it is normally envisaged that the pollution control device can indeed a plant and machinery. The main heading III of the depreciation schedule refers to "machinery and plant" and item 1 thereof says "that machinery and plant other than those covered by sub-items 1A, 2 & 3 below" are eligible for depreciation @ 25%. In other words, therefore, even if an asset is in the nature of plant and machinery but is covered by one of the three specific exclusions set out in this category i.e. Items IA, 2 and 3, it should not be eligible for depreciation at the r....
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....-TAX ACT, 1961 As we, the members constituting Kolkata B bench today, have a difference of opinion of one of the issues before us, we hereby refer the following point of difference to Hon'ble President for esteemed views of a third member under the scheme of Section 255(3) of the Income Tax Act, 1961: "Whether or not in the facts and circumstances of the case 'Fly Ash Handling System' is eligible to be treated as 'Air Pollution Control Equipment' for the purpose of granting depreciation at 100%?" THIRD MEMBER ORDER Dr. O.K. Narayanan In the present case, the assessee is engaged in the manufacture of asbestos sheets. The assessee is using fly ash as one of the raw materials for manufacturing the asbestos sheets. According to the assessee, it has set up a "Fly Ash Handling System" for the purpose of processing fly ash in the manufacture of asbestos sheets. In Appendix-I provided under Rule 5 of Income-tax Rules, 1962, whereunder depreciation schedule is provided, there is a special rate of depreciation for items coming under "Air pollution control equipment". The special rate of depreciation applicable to air pollution control equipments is 100....
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....e assessee is only a part of regular plant and machinery and therefore it is entitled for depreciation only at 15%. The learned Judicial member reversed the order of the Commissioner of Income-tax (Appeals) and restored the order of the Assessing Officer on this point. 5. The learned Accountant Member, on the other hand, held that the Commissioner of Income-tax (Appeals) was justified in holding that the Fly Ash Handling System installed by the assessee is an "Air pollution control equipment" and, therefore, the assessee is entitled for depreciation at 100%. He upheld the order of the Commissioner of Income-tax (Appeals) and sought to dismiss the appeal filed by the Revenue. 6. As there is a difference of opinion between the Hon'ble Members who constituted the Division Bench, the issue was referred to the Hon'ble President for referring the matter to a Third Member. It is thus that the case has been placed before me. 7. The question referred to the Third Member is: "Whether or not in the facts and circumstances of the case 'Fly Ash Handling System' is eligible to be treated as 'Air Pollution Control Equipment' for the purpose of granting depreci....
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....tion schedule, which, according to him. segregate the plant and machinery dealing with production of goods and the plant and machinery in the nature of pollution control devices, I do not share this perception. In any case, I would rather resist from embarking upon this voyage of discovery to find out hidden scheme of things and thus reading what is not specified in the statute and then giving those notions force of life as if these are the words of statute. I leave it at that'. 9. The learned Accountant Member has examined the issue in the correct perspective and has arrived at a decision sustainable in law. As rightly pointed out by the learned Accountant Member, even when Air pollution control equipments are entitled for special rate of depreciation at 100%, still they remain part of machinery and plant as provided in Appendix I. Therefore, the statute itself has taken a view that even though an item belongs to the class of plant and machinery, still it is possible for that item to have its special identity. Therefore, it is only fair to hold that the special status of the Ash Handling System installed by the assessee company does not get diluted only for the reason that it a....