JANTA SUGAR INDUSTRIES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The Tribunal, Allahabad, has referred the following question of law under Section 256(1) of the IT Act, 1961 ('the Act'), for opinion to this Court:

(2.) Whether the Tribunal was justified in law in holding that the assessee was entitled to depreciation on electric generator only at the rate of 10 per cent instead of 30 per cent as claimed by the assessee? 2. The reference relates to the asst. yr. 1983-84.

(3.) Briefly stated, the facts giving rise to the present reference are as follows: The applicant is a registered firm and was running a sugarcane crusher. During the year under consideration, some addition to the machinery was made on which investment allowance was claimed. The ITO had disallowed the claim on the ground that the machinery to the extent of Rs. 64,356 has not been put to use during the year under consideration. The applicant has also claimed depreciation on the generator which was allowed at 10 per cent by the ITO. Feeling aggrieved, the applicant preferred an appeal before the CIT(A) who allowed the same and directed the ITO to allow the claim for investment allowance after verification. He also enhanced the depreciation on the generator from 10 per cent to 30 per cent. Feeling aggrieved by the order passed by the CIT(A), the Revenue preferred an appeal before the Tribunal. The Tribunal has allowed the appeal of the Revenue by holding that the words "and is wholly used for the purpose of the business carried on by him" occurring in the said provision are significant and they connote the idea that investment allowance is to be allowed only when the machinery is used for the purposes of business carried on by the assessee. The Tribunal has further held that depreciation on generator is admissible at the rate of 10 per cent only and not on 30 per cent as allowed by the CIT(A).