Law:

Section:

Section 32(1)(ii) of the income-tax act, 1961 read with rule 5 of, and part I of appendix I (as it stood before 1-4-1970) to, the income- tax rules, 1962-Depreciation-Electrical machinery whether would cover all machineries run by electricity-held, no-assessee running calendar press, printing press and offset printing press-whether tribunal right in holding that litho offset machinery and another machinery embedded with electric equipments would constitute other electrical machinery entitled to a higher depreciation rate of 10 per cent-Held, yes Facts The assessee were carrying on the business of running a calendar press, printing press and offset printing press, etc., and claimed depreciation at the rate of 10 per cent on relevant machineries. Without giving any reasons and giving detail or the nature of the machinery possessed by the assessee, the ITO allowed depreciation only at 7 per cent. On appeal, the AAC accepted assessee's claims on the ground that these items of machinery were all fully embedded with highly sophisticated electrical devices and they were operated by electric power so that they constituted "other electrical machinery" under entry III (iii) E-3(b ) of column 1 of Part I of Appendix. I to the Income-tax Rules, 1962. On second appeal, the Tribunal confirmed the AAC's order. On reference, the revenue contended that "electrical machinery" should only be taken to mean "machinery producing, transmitting or storing electricity". The assessee pleaded that any machinery which was run by electricity could be "other electrical machinery". Held 1. The expression "electrical machinery" could not be taken to mean "machinery which was driven by electricity or whose motive power was electricity". There was some difference between "electrical machinery" and "electrically operated machinery. The operation was one thing and the nature of the machinery was another. Wherever the machinery was such that in-built into it was the electric motor, then it would be electrical machinery. The nature of the enquiry in order to find out whether it was electrical machinery or not was to investigate whether the electric motor was in-built into the machinery and whether…

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