1999 (3) TMI 3

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nces of the case, the Tribunal was right in law in holding that the words 'corrosive chemicals' employed in entry (ii)B(7) of Para III of Part I of Appendix I to the Income-tax Rules, 1962, contemplates not only free chemicals but also non-free chemicals of corrosive effect ?" The assessee is in appeal. The assessee manufactures, among other things, sugar. It claimed depreciation at the higher rate of 15 per cent. on machinery it used in the manufacture of sugar, which was detailed in a statement placed before the Income-tax Officer. It did so having regard to item III(ii)B(7) of Para III of Part I of Appendix I to the Income-tax Rules, 1962, which reads thus :    "Machinery and plant coming into contact rate of depreciat....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....st the statement which had been tendered by the assessee before the Income-tax Officer was that it included machinery that came in contact, not with corrosive chemicals, but with cane juice and molasses, which were not corrosive chemicals but, at best, corrosive materials. The Tribunal found no force in this criticism for the reason that the corrosive chemicals contemplated in the said entry were not only free chemicals but also non-free chemicals provided they were corrosive in effect so far as metals are concerned. Out of the order of the Tribunal the question, quoted above, was referred to the High Court. The High Court disagreed with the Tribunal for the reason that, according to it, lime and sulphuric acid were mixed with the sugarc....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....icals. Corrosive chemicals corrode the machinery. They erode and, by reason of such erosion, the life of the machinery is truncated. To compensate, depreciation is allowed, at a higher rate. It is not intended that the machinery must come into contact with a pure corrosive chemical. It is enough that what passes through the machinery contains chemicals which are corrosive and which, therefore, have the effect of wearing it down. In the instant case, with this understanding of the said entry in mind, the Tribunal shall take further evidence, giving both the assessee and the Revenue the opportunity of producing it, and, based thereon shall decide whether the machinery for which the assessee claims depreciation at the higher rate is entitle....