TaxTMI 
TaxTMI 
2017 (5) TMI 1580
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....ing the depreciation claimed by the appellant without there being any contrary evidence? (ii) Whether in the facts and circumstances of the case, the Hon'ble ITAT was justified in holding that the machine installed by the appellant company is not an energy saving device? (iii) Whether in the facts and circumstances of the case, the Hon'ble ITAT was justified in not considering the certificate issued by the manufacturing company stating that the machine installed by the appellant is a thermally efficient in energy saving? (iv) Whether in the facts and circumstances of the case, the Hon'ble ITAT was justified in not considering the machine installed by the appellant having automatic switch off facility on the completion of the job is not an energy saving device? (v) Whether in the facts and circumstances of the case, the Hon'ble ITAT was justified in not treating the boiler as a part of the composite unit particularly when without boiler the machine cannot be put to operation." 2.1. This Court while admitting the appeal No.464/2008 on 21.08.2009 has framed the following substantial questions of law: "(i) Whether in the facts and circumstances of the case, the Hon'ble ITAT ....
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....processed under section 143(1)(a) of the Income Tax Act. The assessee subsequently filed a revised return declaring the unabsorbed depreciation of the year. It has been stated that interest due to financial institutions in earlier years has been paid during the year and the same was allowable u/s 43B of the Act. Case was selected for scrutiny. Notice u/s 143(2) was served on the assessee. In response to the notice the company appeared before the AO from time to time. 4. Counsel for the appellant has fairly conceded that all the issues are interconnected and, therefore, only one issue is required to be decided. 5. Counsel for the appellant Mr. Sunil Nath has taken us to the observation made by the Assessing Officer with regard to depreciation on dying machine which reads as under: "During the year assessee's total claim for depreciation amounted to Rs. 17,42,72,455/-. Scrutiny of the same revealed that the assesseee has claimed deduction of Rs. 6,89,53,605/- being 100% depreciation on certain items of P&L machinery. Vide query No.3 of questionnaire dated 23.9.1998 the assessee was required to furnish the dtails of such claim and to explain as to how 100% depreciation is allowabl....
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....tor and transformer which is covered by rule 3(E) of the Income tax Rules." Assessee's claim for 100% depreciation on Dyeing machine is rejected. 5.1 He has also taken us to the order of the CIT(A) wherein in para 5.1 and 5.3 which was also reiterated by Mr. Mathur appearing on behalf of the department, the CIT(A) has observed as under: "5.1 The Ao at pages 5 & 6 of the asstt. Order allowed depreciation @ 100% on certain part of the machinery i.e. Boiler and did not allow 100% depreciation on other machines, but allowed depreciation on those machine @ 25%. The main contention of the assessee company is that machines/equipments installed during the year comes within the category of Energy saving Devices. As per item No. 3(iii) of Append to the Income-tax Rules, it will be noticed that in respect of Energy Saving Devices 100% depreciation has been provided. During the year underconsideration equipments/plants ware installed. This also includes installation of Boiler. Such equipments including Boiler were installed for the use of dyeing. The latest equipments were imported and such equipments include automatic monitoring its use i.e. automatic switch off and switch on. Thus such ....
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....epreciation. Assessee's plant and machinery under consideration does not fall under this category. It is in fact a dyeing machine used in Textile Industry. The ld. AR has not been able to convince as to how this machinery & accessory to the machine i.e. boiler entitled to 100% depreciation. This is not integral party of the machinery. Therefore, the AO was justified in restricting the claim of depreciation. The claim of depreciation had correctly been considered by the AO. No relief is allowed to the appellant on this account." 5.2 He has taken us to the certificate issued by the company which reads as under: "NOTE ON DYE HOUSE Rope dyeing machine is the main machines of Dye house to dye the prepared yarn, Apart from Dyes and chemicals used for dyeing the yarn, steam has the key role for proper & uniform dyeing of yarn with the best penetration which is a must. Afterward the yarn is dried by drying range where steam again has key role & hence the Boiler is attached with the functioning of Dye house. We have high efficiency oil fired Boilers which work on approximately 83% thermal efficiency. To have the best performance, we use fuel additive in F.O., Feed water of commercia....
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....;. The Commissioner himself has observed in the order dated March 29, 2001, under Section 263 of the Act that the transmission sub-stations consist of usual circuit breakers, transformers, isolators, arresters, control panel, capacitor bank, etc., which are normal components of voltage step-down systems where high voltage transmission is stepped down to lower voltage. What the Commissioner lost sight of is that transmission of electrical energy is made at high voltage with a view to prevent loss of electrical energy during transmission and if after such transmission, any plant and machinery are used for stepping down the high voltage transmission to lower voltage, such plant and machinery for stepping down the high voltage to lower voltage are part of a larger system of saving electrical energy. We are thus of the view that depreciation is allowable on the plant and machinery in question under Rule 5, Appendix I, Part III(3)(iii)B of the Rules and the finding of the Commissioner in the order dated March 29, 2001, under Section 263 of the Act that the assessment order passed by the Assessing Officer allowing 100 per cent. depreciation on such plant and machinery was erroneous is not....
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....r, bucket elevator and dust collecting system for better utilization of the boiler and claimed 100 per cent depreciation Ie., Rs. 48,84,796. Except for the insulating material, the Assessing Officer by his order dated 26-2-1996, rejected the claim for 100 per cent depreciation. The assessee appealed to the Commissioner (Appeals) against the order of the assessing officer and the appeal was allowed. Further appeal to the Income Tax Appellate Tribunal was dismissed by the Tribunal in the light of the judgment of the Hon'ble Kerala High Court in CIT v. Cochin Refineries Ltd. . The Tribunal observed that the observation of the assessing officer was conjectural as utility of an item should not be examined in isolation and the nature shall depend on the function for which its is used. It also observed that there was no doubt that the boiler will not function in the absence of coal supply system and, therefore, the Tribunal agreed with the Commissioner (Appeals) that the coal supply system was a part and parcel of the boiler and the entire coal system is entitled to depreciation at the rate of 100 per cent. Cochin Refineries Ltd.'s case (supra), the claim was made for depreciati....
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.... the respondent Mr. Mathur has contended that the boiler is granted depreciation but dyeing machine will not be a part of it. The certificate issued by the manufacturer is for the purpose of advertisement. He has taken us to the judgment of Madras High Court in the case of The Commissioner of Income Tax vs. Adar Tea Products Company [2009] 314 ITR 38 (Mad) where the word being has been interpreted. The Madras High Court has observed as under: "2. The assessee had claimed depreciation at 100% on Fluid Bed Drier for the Assessment Year 1994-95. It was allowed. The notice under Section 154 of the Income Tax Act, 1961 ('Act' in short) was issued calling for the assessee's objection for withdrawal of the 100% depreciation. The assessee objected to the disallowance. The objections were rejected as untenable since the Revenue took the stand that a Fluid bed drier is not enumerated as an energy saving device in the old Appendix-I which is applicable for the Assessment Year period from 1988- 1989 to 2002-2003. Even earlier, the Revenue took the same stand for the Assessment Year 1993-94. Those orders were confirmed in appeal. But, the appeal filed against the assessment orders....