Law:

Section:

Section 32 of the Income-tax Act, 1961, read with entry III-B(3) in Part I of Appendix I [omitted by the Income-tax (Fourth Amendment) Rules, 1983, with effect from 2-4-1983] to the Income-tax Rules, 1962 - Depreciation - Allowance/Rates of -Whether, where assessee-company claimed depreciation at the rate of 15 per cent under entry III-B(3) in Part I of Appendix I, on machinery used for manufacture of artificial silk, Tribunal was justified in disallowing its claim - Held, no Facts While framing the assessment for the assessment year 1976-77, the ITO disallowed the assessee-company's claim for depreciation on plant and machinery used for manufacturing artificial silk at the rate of 15 per cent under entry III-B(3) in Part I of Appendix I. On second appeal, the Tribunal held that the said entry was applicable in case of manufacture of machinery meant for manufacturing artificial silk and not in the case of manufacture of silk or synthetics. On reference: Held Entry III-B (3) in Part I of Appendix I provides for the special rate for depreciation prescribed in case of artificial silk manufacturing machinery and plant except wooden parts. That entry could not be construed to mean that it was applicable in case of machinery meant for manufacturing artificial silk. The Tribunal, therefore, was not right in holding that the assessee was not entitled to depreciation of the plant and machinery at 15 per cent vide Entry III-B (3) in Part I of Appendix I. Chaphekar and Samvatsar for the Applicant. R.C. Mukati for the Respondent. JUDGMENT Sohani, J. - By this reference under section 256(1) of the Income-tax Act, 1961 ('the Act') the Tribunal, Indore Bench, has referred the following question of law to this Court for its opinion: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to the depreciation on the plant and machineries at the rate of 15 per cent, as per Entry in Part III-B (3) in Appendix I Part I of the Income-tax Rules, 1962?" 2. The material facts giving rise to this reference, briefly, are as follows: While framing assessment for the assessment year 1976-77, the ITO disallowed the…

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