M/S Maruti Textiles P Ltd, Surat V. The Dycit Cent Cir-2, Surat

ITA 2331/AHD/2002

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8782 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-02-2010
• Assessment Year: 1994-1995
• Appeal Filed On: 03-07-2002
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: VINOD CHAUHAN
• Keywords: Depreciation
• Section: 143(3); 5(2); 250; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.2331/AHD/2002 ASSESSMENT YEAR: 1994-95 DATE OF HEARING:12.3.10 DRAFTED:15.3.10 MARUTI TEXTILES PVT. LTD., 268, 270, GIDC INDUSTRIAL ESTATE, PANDESARA, SURAT PAN NO. AABCM6335Q V/S . DY. CIT, CENTRAL CIRCLE- 2, SURAT (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI VINOD CHAUHAN, AR RESPONDENT BY:- SHRI GOVIND SINGHAL, DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD IN APPEAL NO. CI T[A]-II/CC.2/00-01 DATED 08- 02-2002. THE ASSESSMENT WAS FRAMED BY THE DCIT, CEN TRAL CIRCLE-2, SURAT U/S 143(3) R.W.S. 250 OF THE INCOME-TAX ACT,1961, VIDE HIS ORDER DATED 22-03-2000 FOR ASSESSMENT YEAR 1994-95. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AS REGARDS TO CONFIRMATION OF ACTION OF ASSESSING OFFICER IN DISALLOWING THE CLAI M OF DEPRECIATION @ 100% ON THERMAL ENERGY EFFICIENT STENTER MACHINE (TEESM IN SHORT) BY CIT(A). FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND :- 1. IN VIEW AND ON THE FACTS AS WELL AS THE CIRCUMS TANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDI NG THAT THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF 100% DE PRECIATION ON THERMAL ENERGY EFFICIENT STENTER MACHINE WHEN HE OUGHT TO H AVE HELD THAT THERE WAS NO JUSTIFICATION FOR SUCH DISALLOWANCE AND DIRECTED TO ALLOW DEPRECIATION @ 100% AS CLAIMED AND THEREBY DELETED THE DISALLOWANC E OF RS.20,52,917. IN NOT DOING SO, HE HAS FAILED TO APPRECIATE THE FOLLO WING AMONGST OTHERS: ITA NO.2331/AHD/2002 A.Y. 1994-95 MARUTI TEXTILES PVT. LTD. V. DCIT CC-2, SRT PAGE 2 (A) HE HAS FAILED TO APPRECIATE THAT THE STENTER MA CHINE WAS PURCHASED BY THE APPELLANT FROM M/S. JAYBHARAT VIKRAM ENG. CO. P VT. LTD. AND NOT FROM M/S. DHALL ENTERPRISE & ENG. LTD. IN WHOSE CASE THE STATEMENT WAS GIVEN BY MR. H.U. PANDYA AND THAT SUCH STATEMENT CANNOT B E GENERALIZED AND MADE APPLICABLE IN THE APPELLANTS CASE. (B) HE ALSO FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAS HIMSELF ADMITTED THAT SHRI PANDYA IN MANTRA WHO ISSUED THE CERTIFICATE IS NOT AVAILABLE FOR VERIFICATION OF THE CERTIFICATE ISSUE D BY HIM TO JAYBHARAST VIKRAM ENG. PVT. LTD. THE SUPPLIERS AND THEREFORE N O ADVERSE INFERENCE COULD HAVE BEEN DRAWN IN THE CASE OF APPELLANT. 3. THE BRIEF FACTS ARE THAT THE ASSESSEE CLAIMED 10 0% DEPRECIATION ON TEESM @ 100%. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT ONE SR. SCIENTIST, SHRI H.U. PANDYA OF MANMADE TEXTILE RESEARCH ASSOCIATION (MANTRA IN SHORT) ISSUED A CERTIFICATE TO THE SUPPL IER OF MACHINERY M/S.JAYBHARAT VIKRAM ENG. PVT. LTD., FROM WHOM ASSESSEE HAS PURCH ASED THIS MACHINE. ACCORDING TO HIM, MR. PANDYA ISSUED SIMILAR CERTIFICATE TO AN OTHER MANUFACTURER M/S. DHALL ENTERPRISE & ENG. LTD., WHEREIN THE TEESM WAS MENTI ONED AT 75% AND CALORIFIC VALUE OF COAL WAS MENTIONED AT 4200 KCAL/KG. MR. PA NDYA WAS EXAMINED AND HE ADMITTED THAT THE TEESM FLUID AS WELL AS CALORIFIC VALUE OF COAL IN THE CASE OF M/S. DHALL ENTERPRISE & ENGG. LTD. WAS NOT ACTUALLY MEAS URED AND CARRIED OUT ACTUAL TEST, AND STENTER WAS MENTIONED IN THE CERTIFICATE ON EST IMATE BASIS. THE ASSESSING OFFICER HAS ALSO MENTIONED ONE ANOTHER FIRM M/S. R AMESHWARI PRINTS AND GAVE THE DATA AS UNDER:- WEIGHT OF WET FABRIC WET OF DRY FABRIC ---------------------------------------- ---------- X 100 WEIGHT OF WET FABRIC I.E. 104-61 -------- X 100 104 = 41.34% WEIGHT OF WET FABRIC WET OF DRY FA BRIC ----------------------------------- --------------- X 100 WEIGHT OF DRY FABRIC I.E. 104-61 -------- X 100 61 = 74.49% ITA NO.2331/AHD/2002 A.Y. 1994-95 MARUTI TEXTILES PVT. LTD. V. DCIT CC-2, SRT PAGE 3 THE ASSESSING OFFICER THEREAFTER WORKED OUT THE TEE SM AS UNDER:- ENERGY EFFICIENCY: 1. QUANTITY OF FABRIC DRIED = 5400 KGS. 2. QUANTITY OF MOISTURE EVAPORATED AT 41.34% MANGLE EXPRESS. = 2232 KGS. 3. HEAT REQUIRED FOR FABRIC DRYING = 2733750/5400 = 506 KOAL/KG. 4. HEAT REQUIRED FOR FABRIC DRYING, KOAL/ = 273375 0/232 KOAL/KG OF MOISTURE EVAPORATED = 1224.79 FINALLY, AO DISALLOWED 100% DEPRECIATION BY GIVING FOLLOWING FINDING:- THUS, THE THERMAL EFFICIENCY OF THE STENTER MANUFA CTURED BY JAYBHARAT VIKRAM ENGG. PVT. LT. WORKS OUT TO 1224.79 KOAL/KG. WHICH IS FAR IN EXCESS OF LIMIT PRESCRIBED FOR THE CLAIM OF 100% DEPRECIATION. SINC E, THE THERMAL EFFICIENCY OF FLOOD HEATER AND CALORIFIC VALUE OF COAL AS WELL AS MANGLE EXPRESSION MENTIONED IN THE CERTIFICATE ISSUED TO BOTH MANUFAC TURER OF STENTER ARE IDENTICAL AND THE CERTIFICATES WERE ISSUED BY THE S AME PERSON ON WRONGLY APPLIED FORMULA OF MANGLE EXPRESSION BY CONSIDERING WEIGHT OF DRY FABRIC INSTEAD OF WET FABRIC, THERE REMAINS NO DOUBT THAT THE CERTIFICATES WERE WRONG. IT IS WORTHWHILE TO MENTION HERE THAT MR. PANDYA HA D REVISED THE CERTIFICATES AND WRITTEN TO DHALL ENTERPRISES & ENGG. PVT. LTD. THAT THE THERMAL EFFICIENCY OF THEIR STENTER WAS 1234.2 KOAL/KG. AND THE CERTIFICA TE EARLIER ISSUED WAS WRONG. MR. PANDYA IS NOT AVAILABLE IN MANTRA AND THEREFORE HIS EXAMINATION WITH REFERENCE TO CERTIFICATE ISSUED TO JAYBHARAT VIKRAM ENGG. PVT. LTD. CANNOT BE DONE. IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR THA T THE STENTER PURCHASED BY THE ASSESSEE WAS NOT THERMALLY EFFICIENT AND NOT ELIGIB LE FOR CLAIM OF DEPRECIATION @ 100%. HENCE, THE DISALLOWANCE OF RS.20,52,917/- MADE ION THE ASSESSMENT ORDER WAS CORRECT AND THE SAME IS ADDED TO THE INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER MERELY ON THE BASI S, THAT IN THE STATEMENT OF MR. PANDYA HAS CATEGORICALLY ADMITTED THAT THE CERTIFIC ATE ISSUED TO M/S. DHALL ENTERPRISE & ENGG. PVT. LTD. WAS ON ESTIMATED BASIS. AGGRIEVED, ASSESSEE CAME IN SECOND APPEAL BEFORE. 4. BEFORE US LD. COUNSEL FOR THE ASSESSEE FAIRLY RE LIED ON THE CERTIFICATE ISSUED BY MR. PANDYA DATED 11-10-1993 FROM MANTRA, WHICH I S A SOCIETY REGISTERED AND WORKING UNDER MINISTRY OF TEXTILE, NEW DELHI AND TH E RELEVANT CERTIFICATE ISSUED, WHICH READS AS UNDER:- MANTRA TELEPHONE [phone] ITA NO.2331/AHD/2002 A.Y. 1994-95 MARUTI TEXTILES PVT. LTD. V. DCIT CC-2, SRT PAGE 4 MAN-MADE TEXTILES TELEGRAM : MANTRA RESEARCH ASSOCIATION REGISTERED UNDER BOMBAY PUBLIC TRUST ACT 1959 & SOCIETIES REGISTRATION ACT 1860, LINKED TO MINISTRY OF TEXTILES, NEW DELHI. NEAR MARKET TELEPHONE EXCHANGE RING ROAD SURAT-395002 REF. NO.: MANTRA/3521 DATE: 11/10/93 CERT IFICATE DATA OF ENERGY CONSUMPTION FOR THE JAY BHARAT VIKRA M ENGINEERING CO. P. LTD. HOT AIR STENTER MACHINE IS AS FOLLOWS. A) HEAT INPUT TO JAY BHARAT VIKRAM ENGINEERING CO.P .LTD STENTER MACHINE: 1. COAL CONSUMED = 900 KGS 2. CALORIFIC VALUE OF COAL = 4500 KCAL/KG 3. THERMAL EFFICIENCY OF THERMIC FLUID HEATER = 75% 4. TOTAL HEAT INPUT TO THERMIC FLUID SYSTEM = 900 X 4500 X 0.75 = 3037500 KCAL 5. THERMIC FLUID SYSTEM LINE LOSS = 10% 6. NET HEAT INPUT TO JAYVITEC STENERM/C = (100 -% LOSSES) X NO.4 100 = 0.9 X 3037500 = 2733750 KCAL B) ENERGY EFFICIENCY OF JAY BHARAT VIKRAM ENGINEERI NG CO.P.LTD. STENTER MACHINE: 1. QUANTITY OF FABRIC DRIED = 5400 KGS 2. QUANTITY OF MOISTURE EVAPORATED AT 67% MANGLE EXPRESSION = 3618 KGS 3. HEAT REQUIRED FOR FABRIC DRYING = 2733750/540 0 = 506 KCAL/KG 4. HEAT REQUIRED FOR FABRIC DRYING, KCAL/KG OF MOISTURE EVAPORATED = 2733750/3 618 = 755.607 N.B. : AS PER GOVERNMENT GAZETTE, REQUIRED EVAPORATION CAPACITY IS LESS THAN 800 KCAL/KG FOR ENERGY EFFICIENT STENTER. SD/- H.U.PANDYA SD/- S.S.RAJE SR.SC.OFFICER DY. DIRECTOR THE LD. COUNSEL FOR THE ASSESSEE BEFORE US STATED T HAT AS PER RULE-5 OF I.T. RULES, THE EFFECTIVE RATES AT WHICH DEPRECIATION IS ADMISS IBLE IS GIVEN IN OLD APPENDIX-I AND THIS TEESM FALLS UNDER PARA-A(III) (3) (III) (E) AN D THE RELEVANT SUB-CLAUSE (E) READS AS UNDER:- E. ELECTRICAL EQUIPMENTS: ITA NO.2331/AHD/2002 A.Y. 1994-95 MARUTI TEXTILES PVT. LTD. V. DCIT CC-2, SRT PAGE 5 (A) SHUNT CAPACITORS AND SYNCHRONOUS CONDENSR SYSTE MS (B) AUTOMATIC POWER CUT OFF DEVICES (RELAYS) MOUNTE D ON INDIVIDUAL MOTORS (C) AUTOMATIC VOLTAGE CONTROLLER (D) POWER FACTOR CONTROLLER FOR AC MOTORS (E) SOLID STATE DEVICES FOR CONTROLLING MOTOR SPEED S (F) THERMALY ENERGY-EFFICIENT STENTERS (WHICH REQUI RE 800 OR LESS KILOCALORIES OF HEAT TO EVAPORATE ONE KILOGRAM OF WATER)] THE LD. COUNSEL FOR THE ASSESSEE STRONGLY URGED THA T THE TEESM IS ENTITLED TO 100% DEPRECIATION AND HE NARRATED THE FOLLOWING FACTS:- (A) IT INVOLVES MICRO PROCESSOR BASED CONTROL SYSTE M RESULTING IN SAVING OF ENERGY. THE MACHINE IS THEREFORE COVERED UNDER ITEM NO.III(3)(III) E OF PART A APPENDIX I OF I.T. RULES, 1962. THE LD. COUNSEL FILED A PAPER BOOK AND PLACED RELIA NCE ON THE CERTIFICATE ISSUED BY M/S.JAYBHARAT VIKRAM ENGG. CO. PVT. LTD., THE MANUF ACTURER AND SUPPLIER OF THE MACHINE AS WELL AS CERTIFICATE ISSUED BY MENTRA. TH E LD. COUNSEL SUBMITTED THAT THE TEESM MACHINE PURCHASED BY THE ASSESSEE FROM M/ S. JAYBHARAT VIKRAM ENGG. CO. PVT. LTD. FUNCTIONS ON MICRO PROCESSOR BASED CO NTROL SYSTEM WHICH REGULATES THE MOISTURE EVAPORATION AT 41.34 MANGALE EXPRESS AND A LSO PROVIDE HEAT AS REQUIRED FOR DRYING FABRIC. WE FIND THAT THE ASSESSEE BEFORE CLAIMING DEPRECIATION AT THE HIGHER RATE UNDER APPENDIX I OF THE RULE 5 OF I.T. RULES, 1962 HAS PRODUCED A CERTIFICATE FROM MANTRA, WHICH IS A SOCIETY REGISTERED UNDER BO MBAY PUBLIC TRUST ACT 1950 AND SOCIETIES REGISTRATION ACT 1860, LINKED TO MINI STRY OF TEXTILES, NEW DELHI. WE FIND THAT THE LD. COUNSEL HAS EXPRESSED THE SYSTEM OF TEESM THAT HOT AIR STENTERS ARE FOR THE STENTERING AND DRYING OF COTTON, STAPLE , RAYON, SYNTHETIC AND BLENDED FABRICS. HE ALSO EXPLAINED THE DRYING CAPACITY WATE R @ 250 KGS. PER CHAMBER PER HOUR CAN BE EVAPORATED UNDER CLOTH OF FULL WIDTH WE IGHING 110 GMS. PER SQ.MTR. RUNNING WITH 100% INITIAL MOISTURE IS TO BE DRIED T O A RESIDUAL 8% MOISTURE CONTENT AT SEA LEVEL WHEN STEAM @ 8% ATM. IS BEING FED INTO TH E DRYING CHAMBERS. HE FURTHER NARRATED THE ENERGY CONSUMPTION AT 740 K.CALS CONSU MED PER ONE KG. OF WATER EVAPORATED UNDER THE ABOVE MENTIONED CIRCUMSTANCES. THE EFFICIENC OF THE ABOVE DATA OF WATER EVAPORATION AND STEAM CONSUMPTION ARE TO BE CONSIDERED WITH A TOLERANCE OF +/-5%. THE RELEVANT DATA OF WORKING RE ADS AS UNDER:- MECHANICAL DATA ITA NO.2331/AHD/2002 A.Y. 1994-95 MARUTI TEXTILES PVT. LTD. V. DCIT CC-2, SRT PAGE 6 NUMBER OF DRYING SECTIONS FOUR LENGTH OF EACH DRYING SECTION 3 METRES RANGE OF STENTERING WIDTH 600 TO 1600 MM MACHINE SPEED 0 TO 90 MTS/MIN LENGTH OF THE DRYER 12/15/ MTR LENGTH OF FEED END 8608 MM LENGTH OF DELIVERY END 5170 MM TOTAL HEIGHT OF MACHINE ABOVE FLOOR 3500 MM CLOTH STAND ABOVE FLOOR 1100 MM POWER REQUIRED FOR THE FANS PER CHAMBER 11.0 KW. FOR THE STENTERING CHAIN DRIVE 11.0 KW. FOR THE MOIST AIR OUTLET 4.5 KW. 5. THE LD. DR ON THE OTHER HAND, SUPPORTED THE ORDE R OF CIT(A) AND STATED THAT THAT CERTIFICATE FURNISHED BY THE ASSESSEE AND ISSU ED BY THE SR. SCIENTIST, SHRI PANDYA JUST ON THE ESTIMATE BASIS AND THE SIMILAR CERTIFICATE WAS ISSUED IN THE CASE OF ANOTHER MANUFACTURER M/S. DHALL ENTERPRISE & ENG G. PVT. LTD., WHEREIN THE THERMAL EFFICIENCY OF THE STENTER WAS MENTIONED AT 75% AND CALORIFIC VALUE OF COAL WAS MENTIONED AT 4200 KCAL/KG. HE STATED THAT WHEN EXA MINED ON OATH, MR. PANDYA ADMITTED THAT IN RESPECT OF CERTIFICATE ISSUED TO D HALL ENTERPRISES & ENGG. PVT. LTD. THAT THE THERMAL EFFICIENCY OF THERMIC FLUID AS WEL L AS CALORIFIC VALUE OF COAL WERE NOT ACTUALLY MEASURED WHILE CARRYING OUT ACTUAL TEST ON STENTER BUT MENTIONED IN THE CERTIFICATE ON ESTIMATE BASIS. ACCORDINGLY, HE STAT ED THAT THIS STENTER MACHINE, I.E. TEESM DOES NOT FALL UNDER THE CATEGORY OF 100% DEPR ECIABLE ASSETS. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AS WELL AS FACTS AN D MATERIALS PLACED ON RECORD BEFORE US. THE PROVISIONS AS TO DEPRECIATION IN A TAXING L AW LIKE THE I.T. ACT CONTAIN ELEMENTS OF INCENTIVES AND ARE ALSO INFORMED BY CON SIDERATIONS OF POLICY OF THE TAX ADMINISTRATION AND DO NOT REFLECT PURELY ECONOMIC C RITERIA RELEVANT TO THE DETERMINATION OF THE DEPRECIATION. HIGHER RATE OF D EPRECIATION, BEING 100% HAS OBVIOUSLY BEEN ALLOWED ON ENERGY EFFICIENT MACHINER Y WITH THE OBJECT OF REDUCING POWER CONSUMPTION BY INDUSTRY. POWER IS A VITAL NEE D OF INDUSTRY HOWEVER SCARCITY OF POWER OPERATION AS A SERIOUS BOTTLENECK IN THE DEVE LOPMENT OF NATIONAL ECONOMY. IN OUR OPINION, THE HIGHER RATE OF DEPRECIATION ON ENE RGY SAVING EQUIPMENT HAS TO BE VIEWED IN THIS PERSPECTIVE, THE INCENTIVE PROVISION , WHICH HAS BEEN ENACTED IN A ITA NO.2331/AHD/2002 A.Y. 1994-95 MARUTI TEXTILES PVT. LTD. V. DCIT CC-2, SRT PAGE 7 MACHINERY SECTION FOR THE GROWTH OF INDUSTRY WOULD NEED TO BE LIBERALLY CONSTRUED. THE FACT AND EVIDENCE ON RECORD, AS INDICATED HEREI NBEFORE CLEARLY ESTABLISH THAT THE TEESM PURCHASED BY THE ASSESSEE FROM M/S. JAYBHARAT VIKRAM ENGG. CO. PVT. LTD., IS CLEARLY COVERED UNDER ITEM NO.III(3)(III) (E) OF PART A OF APPENDIX I OF I.T. RULES APPENDIX I GIVES THE TABLE OR RATES AT WHICH DEPREC IATION IN ADMISSIBLE ON VARIOUS ASSETS USED FOR THE PURPOSES OF BUSINESS BY AN ASSE SSEE. PART A OF APPENDIX I ENUMERATES FOUR DIFFERENT CATEGORIES OF ASSETS NAME LY BUILDINGS, FURNITURE & FITTINGS, MACHINERY AND PLANT & SHIPS. SEC. III DEALS WIDTH M ACHINERY AND PLANT, ENTRY IN SUB- CLAUSE (III) OF CLAUSE(3) OF SEC.III CONTAINS THE E NERGY SAVING DEVICES WHICH ARE ENTITLED TO DEPRECIATION @ 100%. THE ENTRY RELIED U PON BY THE ASSESSEE IS CONTAINED UNDER ITEM NO.III(3)(III) (E) DEALING WITH E. ELECTRICAL EQUIPMENTS: (A)SHUNT CAPACITORS AND SYNCHRONOUS CONDENSR SYSTEM S (B)AUTOMATIC POWER CUT OFF DEVICES (RELAYS) MOUNTED ON INDIVIDUAL MOTORS AUTOMATIC VOLTAGE CONTROLLER (D)POWER FACTOR CONTROLLER FOR AC MOTORS (E)SOLID STATE DEVICES FOR CONTROLLING MOTOR SPEEDS (F)THERMALY ENERGY-EFFICIENT STENTERS (WHICH REQUIR E 800 OR LESS KILOCALORIES OF HEAT TO EVAPORATE ONE KILOGRAM OF WATER)] UNDER THIS HEADING VARIOUS ITEMS HAVE BEEN SPECIFIE D. HERE WE WANT TO REFER TO ENTRY (F), WHICH READS AS UNDER:- (F) THERMALLY ENERGY-EFFICIENT STENTERS (WHICH REQ UIRE 800 OR LES KILOCALORIES OF HEAT TO EVAPORATE ONE KILOGRAM OF WATER) THE BASIC QUESTION TO BE CONSIDERED IN THE INSTANT CASE IS WHETHER THE TEESM PURCHASED BY THE ASSESSEE ON WHICH DEPRECIATION IS CLAIMED @ 100% ARE COVERED UNDER THE AFORESAID ENTRY I.E. ENTRY NO.III(3)(III) (E)(F). THE ASSESSEE HAS FILED BEFORE THE LOWER AUTHORITIES BROCHURE OF THE MANUFACTURER AND OTHER TECHNICAL DETAILS OF MACHINE WHICH BRING OUT THE CONFIGURATION AS WELL A S THE DETAILS OF WORKING OF THE MACHINE. 7. THE ASSESSEE HAS FILED CERTIFICATE FROM MANTRA B EFORE THE LOWER AUTHORITIES. THE SAID RESEARCH ASSOCIATION IS A REGISTERED BODY UNDER BOMBAY PUBLIC TRUST ACT, 1950 AND SOCIETIES REGISTRATION ACT, 1880. THIS RES EARCH BODY CARRIES OUT RESEARCH AND DEVELOPMENT ACTIVITIES IN THE FIELD OF COTTON, STAPLE, RAYON, SYNTHETIC AND BLENDED FABRICS AS WELL AS DYES AND CHEMICALS. NOW, WE FEEL THAT IT IS AMPLY ESTABLISHED THAT ITA NO.2331/AHD/2002 A.Y. 1994-95 MARUTI TEXTILES PVT. LTD. V. DCIT CC-2, SRT PAGE 8 THE TEESM FULLY ANSWERS THE DEPRECIATION COVERED UN DER ITEM NO.III (3) (III)(E)(F) OF PART A OF APPENDIX I OF THE I.T. RULES AND IS ENTIT LED TO DEPRECIATION @ 100%. WE MAY NOW BRIEFLY REFER TO THE GROUNDS TAKEN BY THE C IT(A) FOR DENYING THE CLAIM OF 100% DEPRECIATION ON THE TEEMS AND CIT(A) HAS UPHEL D THE ACTION OF THE ASSESSING OFFICER IN DENYING 100% DEPRECIATION MAIN LY ON THE GROUND THAT THE CERTIFICATE FURNISHED FROM MANTRA THE CIT(A) OBSERV ED THAT THE CERTIFICATE IS FOR ESTIMATE BASIS AND SHRI PUNDYA, SR. SCIENTIFIC OFFI CER OF MENTRA HAS CATEGORICALLY ADMITTED THAT IN RESPECT OF CERTIFICATE ISSUED TO D HALL ENTERPRISES & ENGG. PVT. LTD. THAT THE THERMAL EFFICIENCY OF THERMIC FLUID AS WEL L AS CALORIFIC VALUE OF COAL WERE NOT ACTUALLY MEASURED WHILE CARRYING OUT ACTUAL TEST ON STENTER BUT MENTIONED IN THE CERTIFICATE ON ESTIMATE BASIS. WE ARE UNABLE TO AC CEPT THE CONTENTION. IN THE FIRST INSTANCE, IT IS TO BE POINTED OUT THAT THERE IS NO SUCH STATUTORY REQUIREMENT CONTAINED UNDER RULE 5(1) OF THE I.T. RULES OR FOR THAT MATER U/S.32 OF THE ACT MAKING IT OBLIGATORY ON THE ASSESSEE TO FURNISH ANY CERTIFICA TE FROM EXPERT BODY LIKE ISI OR NATIONAL PRODUCTIVITY COUNCIL. NO SUCH REQUIREMENT CAN THEREFORE BE READ INTO THE SECTION FOR GRANTING 100% DEPRECIATION. IT WOULD BE USEFUL IN THIS CONTEXT, TO REFER TO SEC.34(1) WHICH PROVIDED THAT PRESCRIBED PARTICULAR S IN RESPECT OF PLANT & MACHINERY ETC., SHOULD BE FURNISHED AS A DOCUMENTARY CONDITIO N FOR GRANT OF DEPRECIATION U/S.32 OF THE ACT. THIS STATUTORY REQUIREMENT HAS BEEN DIS PENSED WITH BY THE LEGISLATURE BY DELETING SUB-SECTION (1) OF SEC.34 BY TAXATION LAWS (AMENDMENT MISCELLANEOUS PROVISIONS) ACT, 1985 W.E.F. 1-4-1988. THE SEC. 34( 1) THUS CLEARLY MANIFEST THE LEGISLATIVE THAT COMBINATION ALLOWANCE ON A INDUSTR Y ALLOWANCE IS TO BE ALLOWED TO THE ASSESSEE EVEN WITHOUT FUNCTIONING OF THE PARTICULAR S REGARDING THE MACHINERY, RULE 5(1) OF I.T. RULES LAYS DOWN THAT DEPRECIATION IN R ESPECT OF BLOCK OF ASSETS WOULD BE CALCULATED AT THE PRESCRIBED PERCENTAGE SPECIFIED I N THE APPENDIX I TO THESE RULES. IT IS ONLY UNDER RULE 5(2) THAT A SPECIFIC REQUIREMENT HAS BEEN LAID DOWN IN RESPECT OF GRANT OF DEPRECIATION @ 40% ON USE OF INDIGENOUS TE CHNOLOGY REQUIRING ASSESSEE TO FILE A CERTIFICATE FROM THE SECRETARY, DEPARTMENT O F SCIENTIFIC AND INDUSTRIAL RESEARCH, GOVT. OF INDIA. FROM THE AFORESAID FACTS, IT CLEARL Y FOLLOWS THAT THE LEGISLATURE AS WELL AS THE RULE MAKING AUTHORITIES HAVE ADOPTED BROADLY LIBERAL POLICY IN THE MATTER OF ALLOWING DEDUCTION FOR DEPRECIATION POSSIBLY BECAUS E DEPRECIATION IS A STATUTORY ALLOWANCE AVAILABLE TO THE ASSESSEE AS A MATTER OF RIGHT FOR USER OF THE ASSETS FOR ITS BUSINESS. THE ACTION OF THE REVENUE AUTHORITIES IN INSISTING UPON CERTIFICATE FROM ANY PARTICULAR AGENCY IN SUPPORT OF CLAIM OF DEPRECIATI ON AT 100% IS IN OUR OPINION ENTIRELY ITA NO.2331/AHD/2002 A.Y. 1994-95 MARUTI TEXTILES PVT. LTD. V. DCIT CC-2, SRT PAGE 9 VIOLATIVE OF THE LEGISLATIVE INTENTION AS REFLECTED IN THE STATUTORY PROVISIONS OF SEC. 32 AS WELL AS RULE 5 OF I.T. RULES. ONCE THE ASSESSEE HAS FURNISHED THE TECHNICAL INFORMATION REGARDING THE CONFIGURATION AS WELL AS WORKING OF THE MACHINE WHICH INDICATES THAT THE MACHINE IS A MICRO PROCESSOR BAS ED CONTROL SYSTEM RESULTING IN SAVING OF ENERGY, THE ASSESSEE IS ENTITLED TO DEPRE CIATION AT THE PRESCRIBED PERCENTAGE OF 100% AS PROVIDED UNDER ENTRY NO.III(3 )(III)(E)(F) OF PART A OF APPENDIX I OF I.T. RULES, 1962. THIS IS PARTICULARLY SO WHEN T HE ASSESSEE HAS SUPPORTED ITS CLAIM BY A CERTIFICATE ISSUED BY AN EXPERT BODY LIKE MANT RAS. THE CERTIFICATE OF MANTRA FILED BY THE ASSESSEE CONSTITUTES ADMISSIBLE EVIDEN CE BY VIRTUE OF THE PROVISIONS OF SEC. 85 OF THE INDIAN EVIDENCE ACT. THE CERTIFICATE HAS BEEN ISSUED BY MANTRA AFTER CARRYING OUT EXPERIMENTAL STUDIES OF THE WORK ING OF THE MACHINE AND IS SUPPORTED BY TECHNICAL DATE SAVING OR ENERGY. SUCH A TECHNICAL REPORT ISSUED BY ANY EXPERT BODY CANNOT BE BRUSHED ASIDE BY THE TAX AUTH ORITIES WITHOUT CONTROVERTING THE FACTS AND MATERIAL CONTAINED THEREIN. THE OBSERVATI ON OF THE CIT(A) THAT THE REPORT OF MANTRA IS A GENERAL ONE IS IN OUR OPINION FACTUALLY INCORRECT AND LACK OF ABSENCE. WE FIND THAT THE REPORT OF MANTRA IS BASED ON EXPER IMENTAL TEST CONDUCTED BY THE SAID BODY AND GIVEN THE DATE REGARDING SAVING OF EN ERGY. IN VIEW OF THE ABOVE, WE ALLOW THE CLAIM OF THE ASSESSEE. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 19/03/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 19/03/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-II, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD