IT APPEAL NOS. 249 & 250 of 2013

SANJEEV SACHDEVA AND SANJIV KHANNA, JJ.

R. Santhanam and A.P. Sinha for the Appellant.
Sanjeev Rajpal for the Respondent.

JUDGMENT

1. Having heard learned counsel for the parties in these appeals, which pertain to the assessment years 2007-08 and 2008-09, we frame the following substantial question of law:—

"Whether the Income Tax Appellate Tribunal is right in holding that items mentioned under the heading 'electrical installations' are entitled to depreciation @ 10% under the heading 'electrical fittings' and not @ 15% under the heading 'plant and machinery".

2. As a short and limited issue arises for consideration, we dispense with the requirement to file paper books and documents and take up the appeals for final disposal with the consent of the parties at this stage itself.

3. The appellant-assessee is engaged in the business of manufacture of steel metal components, assemblies and sub-assemblies primarily for automobiles and white goods sector. Along with the return, the appellant had filed copy of the balance-sheet and had claimed depreciation under the heading 'electrical installations' @ 15%. The Assessing Officer, however, has held that depreciation @ 10% should be allowed on several items and he accordingly recomputed the depreciation.

4. The following chart for the assessment year 2007-08 gives details of items on which depreciation was claimed:—

5. The following chart for the assessment year 2008-09 gives details of depreciation as claimed by the appellant and what was allowed by the Assessing Officer:—

6. The appellant-assessee did not succeed in the first appeal and has also not Succeeded before the tribunal. The reasoning given by the tribunal is as under:—

"1.1 We have heard both sides. We have also gone through the paper book submitted on this issue. Page 64 of the paper is list of items added in electrical installations during financial year 2006-07. The details available at page 64 of the paper book show that the majority of the expenses are in respect of transformer, panel switchgear, LT PVC Cable, Poly Cab Cable, electric generating set, Electrical Control Panel, Electric Items, installation work, DG Set, etc. All these show that all such expenditure cannot be part of the plant and machinery. Assessee has claimed the rate of depreciation as available on plant and machinery. The details of expenditure show that majority of expenses were towards the electric fittings where rate of depreciation is only 10%. In view of these facts, we hold that this expenditure has been rightly made towards electrical fittings and applicable depreciation has been allowed on the same. The case laws relied upon by the Id. AR are also having different facts. In the case of CIT Vs. MTNL, the nature of the business is different that the nature of business of the assessee. In this case, the assessee was engaged in the business of providing communication network. Similarly, in the case of Siemens Ltd., the company was engaged in manufacture of equipment for generation and transmission of electricity. Thus, in both these cases, facts are different. Assessee's business was to manufacture and sell sheet metal components for automobiles and white goods sector. There is a variation in the nature of the business and facts of case. These items as mentioned at page 64 cannot be treated as part of the plant and machinery. On these electrical items, 10% depreciation is allowable as per rule. This ground of assessee in both the appeals stand dismissed."

7. It is an accepted position that electrical fittings including electrical wirings, switches, sockets and other fittings, etc. are entitled to depreciation @ 10% but plant and machinery is entitled to deprecation @ 15%. We have reproduced above different items on which depreciation was claimed by the assessee @ 15% but was allowed by the Assessing Officer @ 10%. We note that the items include transformers, window ACs, split ACs, inventors, etc. We feel that the matter requires greater consideration as different rates have been specified for electrical fittings including electrical wiring, socket etc. and plant and machinery. Each item has to be examined separately and it has to be determined whether the entry 'electrical fittings' is applicable or the items/goods fall in the entry 'plant and machinery'.

8. Thus, without expressing any opinion, we pass an order of remand to the tribunal to examine the question once again with reference to each and every particular item. It will be open to the parties to rely upon case law on the subject. It will be also open to the parties to point out that some of the items may either fall in 'an other category' or fall in the category of 'electrical equipments'. If any such plea or contention is raised, the same will be considered and decided in accordance with law.
9. The question of law is accordingly answered and the appeals are disposed of.