Law:

Section:

Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of - Assessment year 1979-80 - Assessee was a company engaged in processing of fish, fish meal and fish oil - Whether assessee was entitled to higher rate of depreciation under item IIIA(3) of depreciation table on machinery on ground that machinery came in contact with corrosive chemicals - Held, yes FACTS The assessee was a company engaged in the processing of fish, fish meal and fish oil. For the assessment year 1979-80, the assessee claimed depreciation at the rate of 15 per cent on the machinery used in its business on the ground that the machinery came into contact with a corrosive chemical. While the ITO allowed the claim, the Commissioner disallowed the claim acting under section 263. In spite of production of a certificate from Assistant Professor of Chemical Engineering, Karnataka Regional Engineering College, to the effect that the production process resulted in corrosion to machinery the Tribunal affirmed the order of the Commissioner on the ground that the assessee had not demonstrated that the manufacturing process resulted in electrolytic dissociation of salt solution which alone could release corrosive chlorineions in sufficient quantity. On reference: HELD The purpose of higher rate of depreciation is to give recognition to certain machinery having a shorter life, having regard to the nature of the situation of the machinery or the nature of the process involved in utilising the machinery. In the instant case, the said report of Assistant Professor was produced before the Court. There was a detailed description of the process involved in the extraction of the fish products. The materials for construction of the plant and machinery also were stated. Thereafter the report gave the observations of the Assistant Professor. The details given in the report were not considered by the Tribunal at all. The clarification of the Professor who issued the certificate was also not doubted. The revenue contended that the finding of the Tribunal was one of fact and the Tribunal had considered all relevant materials before rejecting the aforesaid report of the expert. This was not correct.…

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