The division bench of Gujarat High Court today held that, Claim of the depreciation disallowed on Pollution Control Equipments should allowed.
The assessee, in the instant case has claimed depreciation as per IT rules to the tune ofRs.11,72,38,528/-. However, the claim was disallowed by the Assessing Officer alleging that “Perusal of depreciation chart revealed that depreciation on pollution control equipments are either claimed excess or is not allowable.”
While passing the order, the assessing officer observed that “Depreciation on these assets is claimed 100%. Perusal of the details revealed that the items which are treated by the assessee as pollution control equipment,do not fit in the block of 100% depreciation as per IT rules. In the light of depreciation chart given in the IT rules. It was specifically asked to submit report of technical person as to out of Rs.4,73,69,089/-, how much cost of the assets are covered on which depreciation is allowable @ 100%. In compliance to the above, report of ShriJ.J.Chaudhari, General Manager (Technical) is filed. In his report, he has given details of each assets and also the report as to how the particular assets added by the assessee in this year is covered under particular clause of Point No.III (2) (v)& (vi) Appendix-I of Rule-5 of I.T.Rules, 1962. According to the report of General Manager (Technical) assets worth Rs.3,62,16,971/- are covered in the block of 100% depreciation out of total addition of Rs.4,73,69,089/- shown by the assessee as pollution control equipment. It is also mention in the report that other equipment and machineries etc. which are thought not strictly covered in 100% block of IT rules but they function with main plant.” On appeal, CIT(A) also confirmed this view. On second appeal, the Tribunal reversed these orders and allowed the claim of the assessee and hence, the Revenue preferred an appeal before the High Court.
The bench comprising of Justice K S Jhaveri and Justice G.R Udhwani upheld the Order of the Tribunal in which the claim of depreciation was allowed to the assessee by giving due consideration to the opinion of the expert, that the pollution controlling equipments which are used are integral part of the plant. Earlier, both the lower authorities were refused to grant the genuine claim of the assessee by ignoring the expert opinion.
Read the full text of the Judgment below.
