TaxTMI 
TaxTMI 
2017 (5) TMI 1580
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....he case, the Hon'ble ITAT was justified in not allowing 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....
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....n." 3. The brief facts of the case are that the return declaring NIL taxable income and unabsorbed depreciation of the relevant year was filed which was 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....
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.... above advantages. The cost of the machine is Rs. 38,27,397/-. Third item is Efficiency Boiler costing to Rs. 21.10 lakhs which is covered by rule 3(iii) (DR) of the Income Tax Rules, 1961. The item No. four and fifth are electrical conductor 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 w....
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....hich 100% depreciation had been claimed are given at page-5 of the asstt. Order. After scrutiny, it was found that the depreciation on the dyeing machine other than boilers was allowable @ 25% only. The assessee treated this device as "energy saving device embed unit" and claimed 100% depreciation. 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. Afterw....
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.... under 'energy saving devices'. In the communication dated November 7, 2003, of the Chief Electrical Inspector (T & D) quoted above, he has not stated that the other items of machinery in the different grid subsections purchased by the appellant from the OSEB are not devices which can form part of 'automatic electrical load monitoring systems'. 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 depr....
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.... assessment year 1993-94 on 30-12-1993 indicating taxable income of Rs. 2,25,71,671. The assessment was completed under Section 143(3) and income was determined in the sum of Rs. 41,68,560. The Company is engaged in the manufacture of Soya Oil in which it had installed a fluidized bed type boiler in the assessment year 1992-93. Thereafter the Company procured coal container, coal conveyor, 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....
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.... D...... E. Electrical equipments: (a) Shunt capacitors and synchronous condenser systems (b) Automatic power cut off devices (relays) mounted on individual motors (c) Automatic voltage controller (d) Power factor controller for AC motors (e) solid state devices for controlling motor speeds (f) Thermally energy-efficient stenters (which require 800 or less kilocalories of heat to evaporate one kilogram of water) " 6.1 Counsel for 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&....
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....being" as like or including, then it was not necessary to specifically mention "ventilators used with anesthesia apparatus" and "ventilators other than those used with anesthesia". So, it does appear that the depreciation table enumerates and exhausts those equipments for which depreciation is admissible at the rates mentioned. Under the head "Renewal energy devices", the "solar crop driers" as well as "solar water heaters" are included. So, if "driers" was meant to be included, we are sure, they would have been specifically indicated therein. 18. The Table of Depreciation states that the energy-saving devices for which 100% depreciation is allowed are the equipments named therein, i.e., "the energy devices" which are "fluidised bed boilers, furnaces". 21. The table includes energy-saving device in the context and for the purpose of encouraging industries to adopt energysaving measures. While it was possible, in the context of encouraging industrial activity, to bring within the net of exemption, manufacture of products which may even 'be remotely considered as 'paper'; we cannot adopt the same reasoning here, since the table indicates its int....