Law: Income Tax Act, 1961

Section: 32

Income-tax----Depreciation---Rate of depreciation---Construction business---Pieces used for centering costing less than Rs.5,000---Claim for depreciation at 100%--¬No material to determine whether individual pieces would constitute plant--¬Matter remanded---Indian Income Tax Act, 1961, S.32. The assessee had claimed depreciation at 100 percent. under section 32 of the Income Tax Act, 1961, on centering material. The Assessing Officer, however, restricted the same to 33.33 percent. The Commissioner of Income-tax (Appeals), on the basis of the order of the Tribunal in another case, allowed the claim of the assessee. On appeal, the Tribunal found that the facts of this case were similar to the facts of the other case and upheld the order of the Commissioner of Income-tax (Appeals). On a reference it was contended by the Revenue that each centering material could not be taken individually but all the centering materials put together including the scaffolding constituted one plant and machinery and, therefore, the actual cost would exceed Rs.5,000: Held, that the assessee had treated one piece of centering material as a plant and machinery which cost less than Rs.5,000 and had claimed 100 percent. depreciation. The Tribunal had merely referred to an earlier and this was not the correct approach. There was no material to determine whether one or two pieces of centering material would constitute plant as a whole. JUDGMENT A.K. MATHUR, C.J.---This is an income-tax reference under section 256(1) of the Income Tax Act, 1961, at the instance of the Revenue and the following question of law has been referred by the Tribunal answer by this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was entitled to depreciation at 100 percent. on centering material under section 32 of the Income Tax Act, 1961?" The brief facts giving rise to this reference are that while completing the assessment, the Assessing Officer noted that the assessee had claimed depreciation at 100 percent. on centering material. The Assessing Officer, however, restricted the same to 33.33 percent. The Commissioner of Income-tax…

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