M/S SRI. PRABHULINGESHWAR SUGARS and CHEMICALS LTD. vs. THE JOINT COMMISSIONER OF INCOME-TAX(OSD)

: 1 : IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 7TH DAY OF OCTOBER, 2015 PRESENT THE HONOURABLE MR.JUSTICE ANAND BYRAREDDY AND THE HONOURABLE MRS.JUSTICE S.SUJATHA Income Tax Appeal No.100146/2015 C/w. Income Tax Appeal No.100147/2015 In Income Tax Appeal No.100146/2015 : Between: M/s Shri Prabhulingeshwar Sugars & Chemicals Limited, 1st Floor, Sukrut Building, Opposite to K.C. Park Main Gate, Dharwad, Represented by its Executive Vice President, Sri V.Subburathinam, PAN:AACCS7864B. … Appellant (By Shri M.V.Seshachala, Senior Advocate for Shri J.M.Gangadhar, Advocate) And: 1. The Assistant Commissioner of Income-Tax, Central Circle-2, Sharadha Building,

: 2 : Saraf Colony, Khanapur Road, Tilakwadi,Belagavi-590 006. 2. The Joint Commissioner of Income Tax (OSD), Central Circle-2, Sharadha Building, Saraf Colony, Khanapur Road, Tilakwadi, Belagavi-590 006. 3. The Commissioner of Income-Tax, Central Circle, C.R.Building, Queens Road, Bengaluru. … Respondents (By Shri Y.V.Raviraj, Advocate) This appeal is filed under Section 260A of the Income Tax Act 1961, praying to allow the appeal and set aside the orders passed by the Income Tax Appellate Tribunal, Panaji Bench, Panaji, in ITA No.157/PNJ/2014, dated 07.07.2015 produced as Annexure-A, order of the Appellate Commissioner bearing ITA No.32/ACIT, CC-2, Belgaum/CIT(A)-VI/2012-13 dated 28.02.2014, produced as Annexure-B and the order passed by the Assistant Commissioner of Income Tax, Central Circle - 2, Belgaum dated 24.12.2012, produced as Annexure-C and etc., In Income Tax Appeal No.100147/2015 : Between: M/s Shri Prabhulingeshwar Sugars & Chemicals Limited, Registered office: 1st Floor, Sukrut Building, Opposite to K.C. Park Main Gate, Dharwad, Represented by its Executive Vice President, Sri V.Subburathinam, PAN:AACCS7864B. … Appellant

: 3 : (By Shri M.V.Seshachala, Senior Advocate for Shri J.M.Gangadhar, Advocate) And: 1. The Joint Commissioner of Income Tax (OSD), Central Circle-2, Sharadha Building, Saraf Colony, Khanapur Road, Tilakwadi, Belagavi-590 006. 2. The Assistant Commissioner of Income-Tax, Central Circle-2, Sharadha Building, Saraf Colony, Khanapur Road, Tilakwadi,Belagavi-590 006. 3. The Commissioner of Income-Tax, Central Circle, C.R.Building, Queens Road, Bengaluru. … Respondents (By Shri Y.V.Raviraj, Advocate) This appeal is filed under Section 260A of the Income Tax Act 1961, praying to allow the appeal and set aside the orders passed by the Income Tax Appellate Tribunal, Panaji Bench, Panaji, in ITA No.107/PNJ/2014, dated 07.07.2015 produced as Annexure-A, order of the Appellate Commissioner bearing ITA No.287/JCIT (OSD), CC-2, Belgaum/CIT(A)-VI/2011-12 dated 28.08.2013, produced as Annexure-B and the order passed by the Assistant Commissioner of Income Tax, Central Circle - 2, Belgaum dated 30.12.2011, produced as Annexure-C and etc., These appeals coming on for admission, this day, Anand Byrareddy J., delivered the following:

: 4 : JUDGMENT These two appeals are disposed of by this common order having regard to the limited question that is involved. 2. The appellant is a manufacturer of sugar and also generates electricity. It uses a specialised boiler which is fired by bagasse, a by-product of crushed sugar cane. The assessee had claimed a higher rate of depreciation on these specialised boilers during the assessment years 2009-2010 and 2010-2011. The Assessing Officer had held that a specialised boiler is one fired by coal, oil or gas in order to claim a higher depreciation. He was drawing inspiration from the New Appendix I to Rule 5 of the Income Tax Rules, 1962, wherein at item No.III (8), (ix) (A) (d) it is specified as follows: “ High efficiency boilers (thermal efficiency higher than 75 per cent in case of coal fired and 80 per cent in case of oil/gas fired boilers) 3. The Assessing Officer had thought it fit to restrict such depreciation only to a coal fired, oil fired or a gas fired boiler and

: 5 : had refused to extend the depreciation rate adopted by the assessee in respect of a bagasse fired boiler. 4. It is noticed that, insofar as, high efficiency boilers are concerned, it is specified that they should have a thermal efficiency of 75% in the case of a coal fired boiler and a thermal efficiency of 80% in the case of an oil or gas fired boiler. There is no indication of the thermal efficiency of a bagasse fired boiler. If, in the event, it is possible for the assessee to demonstrate that the thermal efficiency of a bagasse fired boiler is akin to that of an oil or gas fired boiler, the appellant would certainly be entitled to claim the benefit of the depreciation claimed. As there is no attempt made by the appellant in this regard, it would be possible for it to produce the relevant material on the basis of an expert opinion after having the thermal efficiency rated, in respect of a bagasse fired boiler. 5. Accordingly, the appeal is summarily allowed. The matter is remanded to the Tribunal for a re-consideration on the basis of material that may be produced by the appellant to demonstrate that

: 6 : a bagasse fired boiler in question is a high efficiency boiler with a thermal efficiency at a particular percentage which would enable the assessee to claim that a bagasse fired boiler would fall under the category as contemplated in the Appendix to the Rules. Sd/- JUDGE Sd/- JUDGE Jm/-