C.I.T. vs. M/S DEVA SINGH SHAM SINGH
What did the High Court hold?
The High Court held that the Tribunal was correct in law in holding that the assessee was entitled to 20% depreciation on the generator. The reasoning was based on the Tribunal's finding that the generator fell under Item III(C)(4) of Appendix I of the Income Tax Rules, 1962. The High Court also referred to its own prior decision in CIT v. Saraswati Industrial Syndicate Limited, (2002) 257 ITR 779, which held that a generator is an integral part of plant and machinery. This position was not disputed by the revenue's counsel. Therefore, the view taken by the Tribunal was upheld. The question referred to the High Court was answered against the revenue and in favour of the assessee. The reference was disposed of accordingly.
What were the facts?
The assessee, M/s. Deva Singh Sham Singh, Amritsar, claimed depreciation at 30% on a generator purchased for Rs. 2,28,419/- for the assessment year 1983-84. The Assessing Officer allowed 10% depreciation. The CIT(A) rejected the assessee's claim for 30% depreciation under Item 10A (renewable energy devices) and also Item III(C)(4) (electrical machinery), allowing only 15% depreciation. The Income Tax Appellate Tribunal (ITAT) held that the generator was covered under Item III(C)(4) of Appendix I of the Income Tax Rules, 1962, entitling the assessee to 20% depreciation. The Commissioner of Income Tax, Amritsar (revenue) has filed a reference application before the High Court challenging the ITAT's order.
What were the issues?
1. Whether the Tribunal has been correct in law in holding that the assessee was entitled to 20% depreciation in respect of a Generator purchased for Rs. 2,28,419/-, by holding that the Electric Generator falls under Item IIIC(4) of Part I of Appendix I of the Income Tax Rules, 1962? (Question of law) Assessee's contention: The assessee claimed depreciation at 30% on the generator, arguing it fell under Item III(C)(4) of Appendix I of the Income Tax Rules, 1962. Revenue's contention: The revenue, through the Commissioner of Income Tax, challenged the ITAT's decision. The Assessing Officer had allowed 10% depreciation, and the CIT(A) allowed 15%, holding that the generator did not qualify for 30% depreciation under renewable energy provisions and was not covered by Item III(C)(4). The revenue's counsel did not dispute the High Court's prior ruling that a generator is an integral part of plant and machinery.
Which sections of the Income-tax Act were involved?
Section III(C)(4) of Appendix I of the Income Tax Rules, 1962
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT: Following question of law has been referred for the opinion of this Court by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar arising out of its order dated 17.12.1992 in ITA No.767(ASR/1988, in respect of assessment year 1983-84:- “Whether the Tribunal has been correct in law in holding that the assessee was entitled to 20% depreciation in respect of Generator purchased for Rs.2,28,419/- by holding that the Electric Generator falls under Item IIIC(4) of Part I of Appendix I of the Income Tax Rules, 1962?” The assessee claimed depreciation at the rate of 30% on Item III ( C ) (4) of Appendix I of the Income Tax Rules, 1962 (for short, 'the Rules'). The Assessing Officer allowed depreciation at the rate of 10%. The CIT(A) rejected the plea of the assessee holding that 30% depreciation under Item No.10A was allowed only on renewable energy devices not using normal source of energy. Item III(C) allowing 20% depreciation was - “electrical machinery-Batteries, X-Ray and electro-therapeutic apparatus
ITR No.564 of 1995 2 and accessories thereto (N.E.S.A.).” This was also held not applicable. It was held that depreciation was allowable at the rate of 15%. The Tribunal held that claim of depreciation on generator was fully covered under Item III(C)(4) of Appendix I of the Rules. In CIT v. Saraswati Industrial Syndicate Limited, (2002) 257 ITR 779, this court held that generator was integral part of plant and machinery. This position is not disputed by learned counsel appearing for the revenue. In view of the above, the view taken by the Tribunal that the generator was covered by Item III(C)(4) of Appendix I of the Rules, is liable to be upheld. Accordingly, the question referred is answered against the revenue and in favour of the assessee. Reference is disposed of accordingly. (Adarsh Kumar Goel) Judge October 30, 2006 (Rajesh Bindal) 'gs' Judge
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