Case Law Details
ITAT KOLKATA BENCH ‘B’ (THIRD MEMBER)
Deputy Commissioner of Income-tax, Central Circle-II, Kolkata
Versus
UAL Industries Ltd.
IT Appeal Nos.2004 (Kol.) of 2009 AND 1668 & 1669 (Kol.) of 2011
[ASSESSMENT YEARS 2005-06, 2006-07 & 2008-09]
JANUARY 1, 2013
ORDER
George Mathan, Judicial Member
This is an appeal filed by the Revenue against the order of the ld. CIT(A)-Central-III, Kolkata in appeal No.276/CC-II/CIT(A)/C-III/08-09 dated 14.09.2009 for the assessment year 2006-07.
2. In this appeal the revenue has raised the following grounds :-
(i) The Ld. CIT(A) has erred in allowing the appeal of the assessee and directed the A.O. to compute the profits derived by the Unit-I and Unit-II separately and allowed deduction u/s 80-IB without considering the facts and provisions of law.
(ii) The Ld. CIT(A) has erred in allowing the appeal of the assessee and considered the two units are separate even though the Directors themselves have held the second unit to be an expansion of the first unit and the so called second unit is located at the same site and have the same boundary wall.
(iii) The Ld. CIT(A) has erred in allowing the appeal of the assessee and considering the ‘Fly Ash Handling System’ as Pollution Control Equipment instead of Plant & Machinery and consequently allowing higher rate of depreciation when the fact of the manufacturing process reveal that the same is used for handling the raw material ‘Fly Ash ‘ and is an integral part of the composite plant.
(iv) The Ld. CIT(A) has erred in allowing the appeal of the assessee and considering the Electrical Installation as Plant & Machinery instead of Furniture & Fixture relying on the assessment order for the AY 2005-06 and consequently allowing higher rate of depreciation , when the assessee failed to adduce evidence in support of Electrical Installation being Plant & Machinery and when the assessment order for the A. Y. 2005-06 is pending for disposal u/s.263 of the I.T. Act, 1961 inter alia on the issue of depreciation.”
3. Shri Ranadhir Gupta, CIT (DR) represented on behalf of the revenue and Shri A.K. Tulsiyan, Advocate represent on behalf of the assessee.
4. At the time of hearing it was fairly agreed by both the sides that ground Nos. (i) and (ii) which was against the action of the ld. CIT(A) in granting the assessee the benefit of deduction u/s 80-IB of the IT Act was squarely covered by the decision of the co-ordinate Bench of this Tribunal in assessee’s own case for A.Yrs. 2002-03 and 2005-06 in ITA No. l783/Kol/2005 dated 21-4-2006 and ITA NO.143/Kol/2009 dated 28-4-2009 respectively.
5. We have considered the submissions. As it is noticed that this issue in ground Nos.(i) and (ii) of the revenue’s appeal is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in assessee’s own case referred to (supra). The findings of the ld. CIT(A) on this issue stand confirmed. Consequently ground Nos. (i) and (ii) of the revenue’s appeal stand dismissed.
6. In regard to ground no.(iii) of the revenue’s appeal, it was submitted by the ld. DR that the issue was against the action of ld. CIT(A) in holding that “Fly Ash Handling system” was pollution controlling equipment which was entitled to the higher rate of depreciation when the fact of the manufacturing process reveal that the same was used for handling of raw material “fly ash” which is an integral part of the composite plant. It was submitted that the assessee is a company which is in the business of manufacture and sale of “asbestos corrugated sheets”. The ld. DR drew our attention to the assessment order for the A.Y.2005-06 wherein this issue is discussed in detail to submit that the major raw material of the assessee company is cement and fly ash. The ld. DR also drew our attention to the Directors report for the assessment year 2005-06 wherein it has been mentioned that the benefits derived as a result of R & D improved the quality of the products by the successful use of standard quality of fly ash in the raw material mixed as a substitute of the cement. It was the further submission that all these facts clearly show that “fly ash” is used as a raw material and therefore the “fly ash handling system” was part of the plant and machinery which could not be treated as a pollution control equipment calling for a 100% depreciation. It was submitted that the equipment is for the safeguard and the optimum use of the fly ash in the manufacture of the corrugated sheets and could not be considered as a pollution control equipment. It was the submission that the order of the ld. CIT(A) holding the same as pollution control equipment was liable to be reversed.
7. In reply the ld. AR submitted that fibres were manufactured by the use of fly ash and the said fibres namely asbestos fibres is a health hazard. It was the submission that the ld. CIT(A) in page-6 at para 4 of his order had extracted the detailed submission of the assessee which categorically showed the necessity of installing the said equipment which was for the purpose of controlling pollution. It was the further submission that the equipment had been installed as per the recommendations of the Pollution control Board. The ld. AR drew our attention to the depreciation table wherein under the column Air pollution control in Item No.(viiie) it has been mentioned that the “ash handling system and evacuation system” was entitled to 100% depreciation. It was submitted that the equipments have been installed for the purpose of controlling the possibility of the pollution caused by the asbestos fibres suspended in the air as the same was having a weight of less than 100th of the weight of air. It was the submission that the said fibres would float in the open and the inhalation of the said over a period of time may result in the inducement or promotion of lung cancer. It was submitted that as the system was installed for the purpose of controlling the pollution caused by the asbestos fibres the same liable to be treated as pollution control equipment. He vehemently supported the orders of the ld. CIT(A).
8. We have heard the rival submissions. A perusal of the letter of Govt. of India, Ministry of Environment and Forests dated 11th March, 2002 addressed to the General Manager of the assessee company shows that the said letter relates to the expansion of the asbestos cement sheet and accessories manufacturing plant by UAL Bengal shows that the condition as specified in the said letter in sub-clause A(iii) “there should be no manual handling/opening of asbestos fiber. The company should install fully automatic asbestos fibre debagging system before commissioning of the unit.” Clause (iv) shows that “adequate measures should be adopted to control the process emission and ensure that the discharge of asbestos fibre does nor exceed the emission limit. The bag filters should be interlocked with the manufacturing process. In the event of failure of any pollution control system, the unit should be put out of operation immediately and should not be restarted until the control system is rectified to achieve the desired efficiency.” A perusal of clause (vi) shows that it is specified that bags containing the fiber should be stored in enclosed area to avoid emission as asbestos fiber from damaged bags. The said clauses clearly show that the plant which has been installed and which is being claimed as pollution control equipment is in fact the plant and machinery which is required for handling the asbestos fiber. Admittedly the asbestos fibre is a health hazard. Obviously such health hazard raw material cannot be handled manually by labour. Just because such material handing of the hazardous material is done without using the manual labour will not make such an equipment “pollution control equipment”. If such claim would have to be accepted then even the storage area which has been specified to be enclosed area to avoid the fugitive emission of asbestos fibres from damaged bags would be another pollution control equipment. The said equipment is part of the raw material handling system which is a part of the plant and machinery used in the manufacturing process. Coming to the submission that the same is a pollution control equipment as specified in depreciation table. It is noted that the wordings used in the said table is “ash handling system and evacuation system”. The two terms ash handling system and evacuation system is to be read together. This would mean that what is treated as air pollution control equipment eligible for 100% depreciation is a system where the ash that is generated is removed from the premises or evacuated from the premises. It means that the ash has been generated on account of the manufacturing process which has resulted in the creation of the air pollution and such pollution being the ash has to be handled and evacuated. The system which does such handling of the pollutant ash and the evacuation of the same is what is eligible for 100% depreciation. In the assessee’s case the use of the system is not ash handling and evacuation. The system in place in the assessee’s case is for handling the fly ash and the asbestos fibres which are raw materials and which are health hazards and which not a pollution as a result of the manufacturing process. In the circumstances we are of the view that the findings of the ld. CIT(A) on this issue is erroneous. Consequently the same stands reversed and that of the AO restored. In the circumstances ground No.(iii) of the revenue’s appeal stands allowed.
9. In regard to ground No.(iv) of the revenue’s appeal, it was submitted by the ld. DR that the issue was against the action of the ld. CIT(A) in directing the AO to allow depreciation on electrical installation as plant and machinery instead of furniture and fixture. At the time of hearing it was fairly agreed by both the sides that the AO has disallowed the depreciation claimed by the assessee at 15% and allowed the same at 10% as the verification to show that the electrical installation were plant and machinery could not be done. It was fully agreed by both the sides that the issue can be restored to the file of AO for granting the assessee an opportunity to substantiate its case that the installation were plant and machinery as also for the verification by the AO.
10. We have considered the rival submissions. As both the sides have agreed to restore the issue to the file of AO for granting the assessee adequate opportunity to substantiate its case that electrical instalments were plant and machinery and not furniture and fixture as also to grant the AO an opportunity to verify such claim this issue is restored to the file of AO. In the circumstances ground no.(iv) of the revenue’s appeal stands allowed for statistical purposes.
11. In the result the appeal of the revenue in ITA No.2004/Kol/2009 is partly allowed for statistical purposes.
12. ITA No.l668/Kol/2011 (A.Yr.2005-06) -.This is an appeal filed by the Revenue against the order of the ld. CIT(A)-Central-III, Kolkata in appeal No.96/CC-II/CIT(A)/C-III/10-11 dated 8-9-2011 for the assessment year 2005-06.
ITA No.l669/Kol/2011 (A.Yr.2008-09) :This is an appeal filed by the Revenue against the order of the ld. CIT(A)-Central-III, Kolkata in appeal No.97/CC-II/CIT(A)/C-III/10-11 dated 8-9-2011 for the assessment year 2008-09.
13. In ITA No.l668/Kol/2011 the revenue has raised the following grounds :-
“1. That in the facts and circumstances of the case and in law, the ld.CIT(A) has erred in considering the items of electrical equipment as “Plant & machinery” instead of “furniture & fixture ” and allowing depreciation accordingly as was claimed by the assessee.
2. That in the facts and circumstances of the case and in law the learned CIT(A) erred in allowing 100% depreciation on Fly Ash Handling System by considering it as “pollution control equipment” instead of “plant & machinery “.
3. That the Department craves leave to add, modify or alter any of the ground(s) of appeal and/or adduce additional evidence at the time of hearing of the case. “
14. In ITA No.l669/Kol/2011 the revenue has raised the following grounds:
“1. That in the facts and circumstances of the case and in law, the ld. CIT(A) has erred in considering the items of electrical equipment as “Plant & machinery” instead of “furniture & fixture ” and allowing depreciation accordingly as was claimed by the assessee.
2. That in the facts and circumstances of the case and in law the learned CIT(A) erred in allowing 200% depreciation on Fly Ash Handling System by considering it as “pollution control equipment” instead of “plant & machinery “.
3. That in the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that Unit-I & Unit-II at Tungadhowa should be treated as independent and separate from each other and deduction u/s 80-IB should be allowed to both the units independently.
3. That the Department craves leave to add, modify or alter any of the ground(s) of appeal and/or adduce additional evidence at the time of hearing of the case.”
15. Consequently our finding in respect of Ground no.(iii) of the revenue’s appeal in ITA No.2004/Kol/2009 (supra) is applicable to the grounds raised in ground No.2 of the revenue’s appeal in ITA No.l668/Kol/2011. Consequently Ground No.2 of the revenue’s appeal stands allowed.
16. Our finding in respect of ground No.(iv) of the revenue’s appeal in ITA No.2004/Kol/2009 covers the issue in ground no. 1 in ITA No.l668/Kol/2011. Consequently the same is allowed for statistical purposes with similar directions in connection with ground no.(iv) in ITA No.2004/Kol/2009.
17. In the result the appeal of the revenue in ITA No. 1668/Kol/2011 is allowed for statistical purposes.
18. Our finding in respect of ground no.(iv) in ITA No.2004/Kol/2009 covers the issue in ground no. 1 in ITA No.1669/Kol/2011. Consequently our findings therein in respect of ground no.(iv) in ITA No.2004/Kol/2009 apply to ground no. 1 in ITA No. 1669/Kol/2011. Consequently ground no. 1 of the revenue’s appeal stand allowed for statistical purposes.
19. Our findings in respect of ground no.(iii) of the revenue’s appeal in ITA No.2004/Kol/2009 covers the issue in ground no.2 of the revenue’s appeal in ITA No.l669/Kol/2011. Consequently ground No.2 of the revenue’s appeal in ITA No. 1669/Kol/2011 stand allowed.
20. Our findings in respect ground nos.(i) and (ii) of the revenue’s appeal in ITA No.2004/Kol/2009 apply to ground no.3 of the revenue’s appeal in ITA No.l669/Kol/2011. Consequently ground No.3 of the revenue’s appeal in ITA No.l669/Kol/2011 stand dismissed.
21. In the result ITA No. 1669/Kol/2011 is partly allowed for statistical purposes.
Pramod Kumar, Accountant Member – There is one issue in this bunch of appeals, i.e. on ground no. 3, for the assessment year 2006-07, on which our views differ, and, despite our discussions on the bench, we have not been able to find common ground on the same. Learned brother is firm that the assessee has no case on this issue and he does not see any point in further discussions on the issue. Learned brother has already dictated his order in the open court and he has proceeded with the stand that he has taken. Since I am not in agreement with the views of my learned brother, and since my persuasive skills have failed to convince my brother of correctness of my view, I proceed to dictate my separate order on this issue.
2. This ground of appeal, raised by revenue against the order of learned CIT (A), is that “that the learned CIT(A) has erred in allowing the appeal of the assessee and considering the ‘fly ash handling system’ as pollution control equipment instead of plant and machinery and consequently allowing higher rate of depreciation whereas the fact of manufacturing process reveals that the same is used for handling raw material ‘fly ash’ and is integral part of the composite plant”. It requires our adjudication on the question whether or not the learned CIT(A) was justified in holding that “Fly Ash Handling System” was required to be treated as Pollution Control Equipment for the purpose of granting depreciation under Item III 3 (viii) of Depreciation Rules as against A.O’s finding that the said equipment was eligible for depreciation @ 25% under Item 3(1) of the Depreciation Rules.
3. Briefly stated, the relevant material facts are like this. In the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed depreciation @100% on “Fly Ash Handing System” in UAL, Bengal, Unit-1. The Assessing Officer was of the view that Fly Ash is one of the raw material and, therefore, ‘Fly Ash Handling System” is plant and machinery on which depreciation can only be granted @ 15%. It was in this backdrop that the Assessing Officer rejected the assessee’s claim of 100% depreciation on the “Fly Ash Handling System” and restricted the claim of depreciation on plant and machinery @ 15%. Aggrieved by the stand taken by Assessing Officer, assessee carried the matter in appeal before the Ld. CIT(A), who upheld the contention of the assessee and noted that the function of the Fly Ash Controverting System is to convert dry fly ash to wet ash. The Ld, CIT(A) further observed that besides converting the dry fly ash into wet fly ash the fly ash converting system also controls the fugitive dust emissions and the wet ash is an input in the manufacture of asbestos sheet. The Ld. CIT(A) has referred to the ill effect caused by inhalation of asbestos fibers and pointed out that in accordance with the pollution control norms of the Govt, of India and the Govt, of West Bengal make it mandatory for the assessee to control emission of asbestos fiber in the work place. The Ld. CIT(A)’s finding was that the fly ash control conversion system is not merely a “Plant and Machinery” but also a “Pollution Control Equipment”. Accordingly, Ld. CIT(A) concluded that if “Fly Ash Conversion System” is eligible for grant of depreciation @ 100% being a pollution control device. Aggrieved by the relief so granted by the CIT(A), the Assessing Officer is in appeal before us.
4. Having heard the rival contentions and having perused the material on record, I find that there is no dispute about the fact that the Fly Ash Conversion System used by the assessee does control the pollution and is, as such, a pollution control device but the primary objection of the Assessing Officer is that since it is integral part of the plant and machinery and since fibers are raw material, this Fly Ash Conversion System cannot be treated as a pollution control device. In the brief observation made by the Assessing Officer on this issue, it is highlighted that fly ash is one of the raw materials and, therefore, fly ash handling system is plant and machinery. However, even as this observation was made, the Assessing Officer did not question assessee’s submissions to the effect that the Fly Ash Handling System does control the pollution.
5. In my considered view there is no conflict between the Fly Ash Handling System being a pollution control device and also being a part of plant and machinery. A plain reading on the depreciation table shows that under the scheme of categories of assets for depreciation, it is normally envisaged that the pollution control device can indeed a plant and machinery. The main heading III of the depreciation schedule refers to “machinery and plant” and item 1 thereof says “that machinery and plant other than those covered by sub-items 1A, 2 & 3 below” are eligible for depreciation @ 25%. In other words, therefore, even if an asset is in the nature of plant and machinery but is covered by one of the three specific exclusions set out in this category i.e. Items IA, 2 and 3, it should not be eligible for depreciation at the rate against main heading III but at the rate specified against respective sub heading. In sub category 3 of item no. VIII(e), under the head III ‘Machinery and Plant’, the specific heading is Fly Ash Handing System and the Fly Ash Conversion System and this entry is under the sub-heading “Pollution Control Equipment”. It would thus, therefore, emerge from a plain look at this entry and that Air Pollution Control Equipment in the nature of item a, b, c, d & e specified therein are eligible for 100% depreciation, even if these are in the nature of plant and machinery. The expressions ‘plant and machinery’ and ‘pollution control equipment’ are not mutually exclusive, but, on the other hand, latter expression covers only a small part of the scope of the former expression. The fact as to whether the ash handled by the air pollution control devices is in the nature of raw material or an undesirable byproduct in my understanding is wholly irrelevant. As a matter of fact, unless the pollution control device is in the nature of machinery and plant, it is not covered by the depreciation schedule at all. As for learned Departmental Representative’s notions about the clear and unambiguous scheme of the depreciation schedule, which, according to him, segregate the plant and machinery dealing with production of goods and the plant and machinery in the nature of pollution control device, I do not share this perception. In any case, I would rather resist from embarking upon this voyage of discovery to find out hidden scheme of things and thus reading what is not specified in the statute and then giving those notions force of life as if these are the words of statute. I leave it at that.
6. For the reason set out above, in my considered view the Fly Ash Handling System is in the nature of air pollution control equipment which is covered generally by entry III(3) (viii) (e) the CIT(A) was, therefore, quite justified in directing the Assessing Officer to grant 100% depreciation. I confirm his action and declined to interfere on this issue. Ground no.3 is, therefore, dismissed. Accordingly, identical grievances of the revenue in other assessment years must also stand dismissed. I order so.
7. Save and except as mentioned above, I am in respectful agreement with the view expressed by my learned brother and I endorse the same.
REFERENCE UNDER SECTION 255(3) OF THE INCOME-TAX ACT, 1961
As we, the members constituting Kolkata B bench today, have a difference of opinion of one of the issues before us, we hereby refer the following point of difference to Hon’ble President for esteemed views of a third member under the scheme of Section 255(3) of the Income Tax Act, 1961:
“Whether or not in the facts and circumstances of the case ‘Fly Ash Handling System’ is eligible to be treated as ‘Air Pollution Control Equipment’ for the purpose of granting depreciation at 100%?”
THIRD MEMBER ORDER
Dr. O.K. Narayanan, Vice-President (As a Third Member) – In the present case, the assessee is engaged in the manufacture of asbestos sheets. The assessee is using fly ash as one of the raw materials for manufacturing the asbestos sheets. According to the assessee, it has set up a “Fly Ash Handling System” for the purpose of processing fly ash in the manufacture of asbestos sheets. In Appendix-I provided under Rule 5 of Income-tax Rules, 1962, whereunder depreciation schedule is provided, there is a special rate of depreciation for items coming under “Air pollution control equipment”. The special rate of depreciation applicable to air pollution control equipments is 100%. Air pollution control equipment also includes “Ash handling system and evacuation system”. on the above premises, the assessee claimed depreciation at 100% on its Fly Ash Handling System.
2. The Assessing Officer did not agree with the claim made by the assessee. According to the Assessing Office, fly ash is one of the raw materials used by the assessee to manufacture asbestos sheets and, therefore, the fly ash system installed by the assessee forms part of the plant and machinery as a whole and as such the assessee is entitled for depreciation only at 15% on “Fly Ash Handling System” like other items of plant and machinery. The Assessing Officer declined to treat it as “Ash handling system and evacuation system” coming under the head “Air pollution control equipment”. In other words, the Assessing Officer treated the system installed by the assessee as plant and machinery and not as Air pollution control equipment.
3. In first appeal, the Commissioner of Income-tax (Appeals) agreed with the contentions raised by the assessee and held that the fly ash converting system installed by the assessee is to convert dry fly ash to wet fly ash and in that process of conversion, the converting system installed by the assessee controls the emission of fugitive dust and contributes to air pollution control within the factory premises. He observed that inhalation of asbestos fibers is injurious to health and, therefore, it is mandatory to follow the pollution control norms laid down by the Government of India and the Government of West Bengal and in fact the assessee is exactly doing the same thing by installing the ash converting system. Therefore, the Commissioner of Income-tax (Appeals) held that even though the system installed by the assessee is part of plant and machinery, it does not cease to be an “Air pollution control equipment”. On the basis of the above finding, he allowed depreciation at the rate of 100%.
4. The Revenue came up in second appeal before the Tribunal. The learned Judicial Member, who authored the leading order, held that the Fly Ash Handling System installed by the assessee-company does not fall under the category of “Air pollution control equipment” and, therefore, it is not entitled for depreciation at 100%. The learned Judicial Member agreed with the view of the Assessing Officer that the Fly Ash Converting System installed by the assessee is only a part of regular plant and machinery and therefore it is entitled for depreciation only at 15%. The learned Judicial member reversed the order of the Commissioner of Income-tax (Appeals) and restored the order of the Assessing Officer on this point.
5. The learned Accountant Member, on the other hand, held that the Commissioner of Income-tax (Appeals) was justified in holding that the Fly Ash Handling System installed by the assessee is an “Air pollution control equipment” and, therefore, the assessee is entitled for depreciation at 100%. He upheld the order of the Commissioner of Income-tax (Appeals) and sought to dismiss the appeal filed by the Revenue.
6. As there is a difference of opinion between the Hon’ble Members who constituted the Division Bench, the issue was referred to the Hon’ble President for referring the matter to a Third Member. It is thus that the case has been placed before me.
7. The question referred to the Third Member is:
“Whether or not in the facts and circumstances of the case ‘Fly Ash Handling System’ is eligible to be treated as ‘Air Pollution Control Equipment’ for the purpose of granting depreciation at 100%?”
8. On hearing both sides in detail, I am inclined to agree with the view expressed by the learned Accountant Member. As the learned Accountant Member has dealt with the issue in a very comprehensive and precise manner, it is better to extract the speaking portion of his dissenting order as under:
‘5. In my considered view there is no conflict between the Fly Ash Handling System being a pollution control device and also being a part of plant and machinery. A plain reading on the depreciation table shows that under the scheme of categories of assets for depreciation, it is normally envisaged that the pollution control device can be indeed a plant and machinery. The main heading III of the depreciation schedule refers to “machinery and plant” and item 1 thereof says “that machinery and plant other than those covered by sub-items 1A, 2 & 3 below” are eligible for depreciation @ 25%. In other words, therefore, even if an asset is in the nature of plant and machinery but is covered by one of the three specific exclusions set out in this category i.e. Items 1A, 2 and 3, it should not be eligible for depreciation at the rate against main heading III but at the rate specified against respective sub heading. In sub category 3 of item no. VIII(e), under the head III ‘Machinery and Plant’, the specific heading is Fly Ash Handing System and the Fly Ash Conversion System and this entry is under the sub-heading “Pollution Control Equipment”. It would thus, therefore, emerge from a plain look at this entry and that Air Pollution Control Equipment in the nature of items a, b, c, d & e specified therein are eligible for 100% depreciation, even if these are in the nature of ‘plant and machinery’. The expressions ‘plant and machinery’ and ‘pollution control equipment’ are not mutually exclusive, but, on the other hand, latter expression covers only a small part of the scope of the former expression. The fact as to whether the ash handled by the air pollution control device is in the nature of raw material or an undesirable byproduct, in my understanding, is wholly irrelevant. As a matter of fact, unless the pollution control device is in the nature of machinery and plant, it is not covered by the depreciation schedule at all. As for learned Departmental Representative’s notions about the clear and unambiguous scheme of the depreciation schedule, which, according to him. segregate the plant and machinery dealing with production of goods and the plant and machinery in the nature of pollution control devices, I do not share this perception. In any case, I would rather resist from embarking upon this voyage of discovery to find out hidden scheme of things and thus reading what is not specified in the statute and then giving those notions force of life as if these are the words of statute. I leave it at that’.
9. The learned Accountant Member has examined the issue in the correct perspective and has arrived at a decision sustainable in law. As rightly pointed out by the learned Accountant Member, even when Air pollution control equipments are entitled for special rate of depreciation at 100%, still they remain part of machinery and plant as provided in Appendix I. Therefore, the statute itself has taken a view that even though an item belongs to the class of plant and machinery, still it is possible for that item to have its special identity. Therefore, it is only fair to hold that the special status of the Ash Handling System installed by the assessee company does not get diluted only for the reason that it also forms part of the regular plant and machinery of the assessee. The Fly Ash Handling System installed by the assessee while forming part of the plant and machinery erected by the assessee in its factory, still holds the outstanding quality of “air pollution control equipment”. Therefore, obviously, the Fly Ash Handling System installed by the assessee is entitled for higher amount of depreciation at 100%.
10. In this context it is relevant to mention the principle of interpretation contained in the legal maxim generalia specialibus non derogant.A special provision normally excludes the operation of a general provision. This principle can be resorted for deciding the competing averments of two provisions in the same enactment, a general and a special provision with some overlapping between the two. In the present case, the Fly Ash Handling System, even though classified under plant and machinery as a general item, is still qualified as a different class under the heading “Air pollution control equipment” entitled for higher amount of depreciation. Therefore, the special category, under which air pollution control equipment is placed, applies to the Fly Ash Handing System installed by the assessee. Its eligibility for higher amount of depreciation will not be shadowed by the general rate provided for plant and machinery.
11. I agree with the order passed by the learned Accountant Member and hold alongwith him that the Fly Ash Handling System installed by the assessee is eligible to be treated as “air pollution control equipment” for the purpose of granting depreciation at 100%.
12. Now these appeals will be placed before the regular Bench for passing orders to finally dispose of the cases on the basis of majority view.
