JUDGMENT
Y.V. Anjaneyulu, J.
1. At the instance of the assessee, the Income-tax Appellate Tribunal referred the following question of law for the consideration of this court in connection with the assessment years 1976-77, 1977-78 and 1978-79.
“Whether, on the facts and in the circumstances of the case, the sugar plant and machinery, distillery plant and machinery and molasses tanks would come into contact with corrosive chemicals and consequently whether such machinery is entitled to depreciation at 15% under item-7 of entry III(ii) B of Part I of Appendix I of the Income-tax Rules, 1962 ?”
2. The assessee, a public company, carries on business, inter alia, in the manufacture and sale of sugar. In connection with the income-tax assessment years 1977-78 and 1978-79, the assessee put forward a claim that it was entitled to depreciation on its plant and machinery at 16%. That depreciation was allowed. Later on, the successor Income-tax Officer seems to have realised that the allowance of depreciation at 15% was erroneous and that the correct rate of depreciation to be allowed was only the general rate at 10%. In that view, the assessments for the years 1976-77, 1977-78 and 1978-79 were reopened under section 148. We may mention that the assessee unsuccessfully questioned the reopening of assessments under section 148 by filing writ petitions in this court. Eventually, the Income-tax Officer had taken up the reassessments under section 148 and held that plant and machinery employed by the assessee in the manufacture of sugar was entitled to depreciation only at 10% which was the general rate. The assessee reiterated its claim for depreciation at 15%. The Income-tax Officer observed in paragraph 3.1 of the assessment order as under :
“It is now found that the aforesaid plant and machinery do not come into contact with corrosive chemicals and do not fall within item 7 of entry 111(ii) B of Part I of Appendix I to the Income-tax Rules and, consequently, it is not entitled to depreciation at 15% but only at 10%”.
3. The assessee unsuccessfully appealed to the Commissioner of Income-tax (Appeals). Thereafter, the assessee carried the matter in further appeal to the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal also dismissed the appeal filed by the assessee. The Tribunal devoted considerable attention to the claim concerning the validity of the proceedings under section 148 and dealt with the merits of the claim for depreciation in paragraph 8 of its order. The Tribunal referred to the Income-tax Officer’s finding above referred to in the assessment order and in view of that finding held that the assessee is not entitled to depreciation at the higher rate of 15%. The Tribunal also referred to the decision of the Punjab and Haryana High Court in CIT v. Saraswati Industrial Syndicate Ltd. , and observed that the authorities below followed the ratio of the judgment of the Punjab and Haryana High Court in arriving at the conclusion that the appellant is entitled to depreciation only at 10%. In that view, the Tribunal held that there was no infirmity in the orders of the authorities below. Aggrieved by the order of the Tribunal, the assessee sought for this reference under section 256 (1).
4. The question referred for consideration of this court has already been extracted above in paragraph 1, at page 226.
5. We have heard Sri S. Parvatha Rao, learned counsel for the assessee, and also learned standing counsel for the Revenue. The question whether plant and machinery in a given case came into contact with corrosive chemicals or not is essentially a question of fact and no principles of law govern the matter. It is for the assessee to lay the appropriate foundation before the tax authorities as to how the plant and machinery came into contact with corrosive chemicals, establish the same as a matter of fact and then base its claim for the higher rate of depreciation at 15%. Unless the assessee initially furnishes the relevant information for the purpose of appreciating the claim that the plant and machinery came into contact with corrosive chemicals, the further question whether the assessee’s plant and machinery is entitled to depreciation at 15% does not arise. In the present case, we have waded through the entire record to find out whether at any stage the assessee informed the tax authorities below as to how its plant and machinery came into contact with corrosive chemicals. The nature of corrosive chemicals involved and how in the process of manufacture, the plant and machinery came into contact with corrosive chemicals should be explained precisely by the assessee. We find that at no stage of the proceeding, the assessee placed before the tax authorities the relevant details to appreciate the contention that corrosive chemicals came into contact with the assessee’s plant and machinery during the course of manufacture of sugar. All that was said was that the depreciation claim of 15% was allowed initially (obviously without investigating into the matter). When the Punjab and Haryana High Court decision was noticed and the proceedings under section 148 were taken, the assessee pursued its claim for depreciation at 15% not by pointing out how its own plant and machinery came into contact with corrosive chemicals but by drawing the attention of the tax authorities to the decision of the Punjab and Haryana High Court and asking the tax authorities to assume the same facts as in the Punjab and Haryana High Court’s case. Even before us, learned counsel for the assessee, Sri S. Parvatha Rao, was at pains to explain that although the details relating to the corrosive chemicals which came into contact with the assessee’s plant and machinery were not set out before the tax authorities, the fact remains that the situation as was obtaining in the Punjab and Haryana High Court case was obtaining in the assessee’s case also in that, sulphuric acid mixed with cane juice was coming into contact with the plant and machinery and for that reason it could be said that the machinery is entitled to higher depreciation at 15%. We have no doubt that Mr. Parvatha Rao must be correct in what he says, but unfortunately there is no foundation at all for his claim that sulphuric acid mixed with cane juice was coming into contact with the plant and machinery employed by the assessee in the manufacture of sugar. If the initial fact itself has not been revealed and established by the assessee, one wonders how the tax authorities could be expected to examine the matter and determine the correctness or otherwise of the assessee’s claim that the higher rate of depreciation should be allowed because the machinery was coming into contact with corrosive chemicals. The finding of the Income-tax Officer was categorical that the assessee’s plant and machinery was not coming into contact with any corrosive chemicals and it was also the finding of the Income-tax Appellate Tribunal. This finding arrived at is a finding of fact and no question of law arises. So far as we can see, the Tribunal was in error in granting reference to the assessee for the consideration of this court.
6. Even assuming that the matter can be treated as a question of law there can be no escape from the conclusion that the Tribunal was correct in the view it expressed. We accordingly answer the question in the negative, that is to say, in favour of the Revenue and against the assessee. No costs.