ORDER
N. S. CHOPRA, A.M. :
These two appeals of the Department relating to the asst. yrs. 1979-80 and 1984-85 are disposed of by this common order for the sake of convenience.
2. ITA No. 137 :
The Department is in appeal against the order dt. 5th Nov., 1985 of the CIT(A) allowing assessees claim of depreciation @ 15% on its plant and machinery as against 10% allowed by the ITO.
3. The assessee-company is engaged in manufacture of graphite electrodes. Before the ITO it was claimed that its plant and machinery came into contact with corrosive chemicals, and, therefore, higher rate of depreciation i.e., 15% which had been provided in the IT Rules was available to the assessee. In support of its claim the assessee filed a certificate from its French collaborators and also gave details of various process material involved in the manufacture of graphite electrodes and the chemical analysis of the same. It also detailed the effect of the process material and the gases/fumes generated during the course of manufacture on its plant and machinery. The assessee also brought to the notice of the Assessing Officer the case of M/s. Graphite India Ltd. Calcutta where depreciation @ 15% had been allowed. The assessee also gave the ITO the permanent account number along with the address of the Calcutta ITO assessing M/s. Graphite India Limited, Calcutta.
4. The ITO did not feel it necessary to consult the Assessing Officer incharge of M/s. Graphite India Ltd., Calcutta when he took the view that the assessee had not furnished the relevant facts. He also took the view that even if the Calcutta ITO has allowed higher rate of depreciation it was possible that the same had been wrongly allowed and such mistake may have been rectified under S. 263 of the IT Act.
5. Dealing with the certificate of the assessees foreign collaborators; details of various process materials used for manufacture and the effect of the process materials and gases/fumes generated, the ITO took the view that all these did not prove the assessees case. He also took the view that the chemicals used should be 100% corrosive and petty corrosive chemicals present in the process material of the assessee did not have any effect of corrosion on its plant. He also took the view that a certain percentage of corrosive chemicals present in the whole substance did not prove that the part is corrosive considered in the whole substance. The Assessing Officer accordingly allowed depreciation @ 10%.
6. The learned CIT(A), in appeal, on a consideration of the relevant facts and circumstances and also the material before him in the form of collaborators certificate, types of process material used, chemical analysis thereof and the stages of production differed with the view taken by the Assessing Officer and held that the assessee was entitled to higher rate of depreciation i.e., 15%.
7. Learned Department Representative broadly adopted the line of reasoning taken by he ITO. He argued that the process material should be 100% corrosive to entitle the assessee to higher rate of depreciation. He argued that small percentage of corrosive chemicals like sulphur present in the process material did not result in corrosion. Developing his arguments on the line of the judgment of the Punjab & Haryana High Court in the case of CIT vs. Saraswati Industries Syndicate (1982) 136 ITR 758 (P&H), the Departmental Representative submitted that the gases/fumes generated in the process did not come into contact with the main plant and machinery. He argued that the whole substance of process material should be corrosive chemicals and a small percentage of corrosive chemicals present in the process material did not entitle the assessee to a higher rate of depreciation. He thus strenuously argued that the finding of the learned CIT(A) be reversed.
8. Shri Mehta, the learned counsel for the assessee, on the other hand, reiterated the stand taken before the CIT(A).
9. We have heard the rival submissions and minutely perused the case records. We have also gone through the certificate of the foreign collaborators and various details of process material, stages of production and the chemical analysis. The case of Saraswati Industrial Syndicate (supra) relied upon by the Assessing Officer as also referred to by the learned Departmental Representative relates to a sugar factory where lime and acid were used with sugar cane joice for purification and filteration of the juice. Its claim for higher rate of depreciation was negatived when the Honble High Court found that the purified juice was coming into contact with the plant and machinery after the chemical had already undergone changes during the process of purification and the plant did not come into contact with corrosive chemicals. In the instant case, however, the process material itself contained corrosive chemicals coming into contact with the plant and machinery as also the gases and fumes generated at various stages of production while manufacturing the graphite electrodes. We are also not impressed with the argument of the learned Departmental Representative that the chemical should be 100% corrosive to entitle the assessee a higher rate of depreciation. In our view, even a small percentage of corrosive chemicals contained in the process material, as in the case of the assessee, would be corrosive to the plant and machinery of the assessee. We are, therefore, of the view that the order of the CIT(A) deserves to be sustained. Thus, the Departmental appeal is dismissed.
10. ITA No. 15 :
This Departmental appeal is against the order of the CIT(A) holding that interest charged under S. 217(1A) by the Assessing Officer was not justified. The Assessing Officer levied interest of Rs. 2,67,212 under S. 271(1A). The CIT(A), in appeal, on an appraisal of the relevant facts and circumstances held that interest was not chargeable.
11. Learned Departmental Representative argued that interest was rightly charged. Learned counsel for the assessee supported the order of the CIT(A).
12. We have heard the rival submissions. The learned CIT(A) noted that the assessee was not liable to interest charged as it was not liable to file estimate under S. 209A(1)(i)/209A(2), the total income assessed in earlier years being loss. He further noted that on the date when the first instalment of advance-tax was due, neither the income assessed for the latest year was a positive figure nor any payment under S. 140A was made in respect of the return filed upto that date. These facts are not controverted. Therefore, the CIT(A) was right in deleting the interest charged, as in the circumstances of the case, provision of S. 217(1A) are not attracted. We uphold the order of the learned CIT(A). This appeal is also dismissed.
13. In the result, both the appeals are dismissed.