DCIT Vs Philips India Limited (ITAT Kolkata)
Income Tax Appellate Tribunal (ITAT) Kolkata bench has dismissed appeals filed by the Deputy Commissioner of Income Tax (DCIT) against Philips India Limited, affirming the assessee’s entitlement to claim 30% depreciation on moulds. These moulds, owned by Philips India, were utilized by third-party vendors for manufacturing plastic and rubber products exclusively for the company. The ruling, consistent across Assessment Years (AYs) 2012-13, 2013-14, and 2015-16, reinforces the principle that ownership and use for the assessee’s business purpose are key, irrespective of the physical location of the asset.
The Revenue had filed appeals challenging separate orders from the Commissioner of Income Tax (Appeals)-NFAC, Delhi, which had partially allowed Philips India’s appeals against assessment orders. The core dispute revolved around the rate of depreciation allowable on the moulds. The Assessing Officer (AO) had restricted the depreciation to 15%, the general rate for plant and machinery, arguing that Philips India was not directly engaged in the manufacturing of plastic and/or rubber products and therefore did not qualify for the enhanced 30% rate applicable to plastic and rubber goods factories.
Philips India, on the other hand, contended that the moulds were owned by them and provided to exclusive vendors to fulfill their plastic requirements for various products, including electronics, electrical products, and electronic medical equipment. The assessee maintained that since the moulds were used for the purpose of their business, they were eligible for the 30% depreciation rate.
