Law:

Section:

Section 32(1)(vi) Of The Income-Tax Act, 1961-Depreciation-Initial Depreciation-Whether Insulation Boards Manufactured By Assessee And Used Only In Electrical Industry Could Be Called 'Paper' Within The Purview Of Item 18 Of The Ninth Schedule To The Act And, Hence, Assessee Was Entitled To Initial Depreciation On Plant And Machinery Installed To Manufacture Said Insulation Board-Held, On Facts, Yes Facts The assessee-company, a manufacturer, inter alia, of electrical insulation boards, used in electrical industry claimed initial depreciation under section 32(1)(vi) in respect of additions made to plant and machinery after 31-5-1974, relating to the manufacture of insulation boards on the ground that the product manufactured by it was paper and, hence, fell under item 18 of the Ninth Schedule to the Act. The ITO disallowed the assessee's claim. On appeal, the AAC upheld the ITO's order. On further appeal, the Tribunal having found (i) that the raw material used and the process of manufacture adopted by the assessee were similar to those in paper industry, (ii) that the product manufactured by the assessee came under the Paper Directory of the Directorate General of Technical Department, Government of India, and (iii) that the excise duty levied on the assessee and the licence issued to him under the Central Excise and Salt Tax Act, 1944, were under the item 'Paper and paper boards, allowed the assessee's claim. On reference: Held In the instant case, it was clear that the product manufactured by the assessee was similar to paper. The most relevant circumstance for ascertaining the question as to whether a product manufactured by the assessee could be called paper within the purview of item 18 of the Ninth Schedule was the classification for the purpose of levy of excise duty under the Central Excise and Salt Tax Act which was based on the test certificate issued by the National Test House, Alipore, Calcutta, which is a Government of India Test House. The National Test House, after examining samples of insulation boards manufactured by the assessee had certified that the said samples might generally be classified as press papers of electrical tradeg rade and on…

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