Rajes Kumar, J.
1. The Income Tax Appellate Tribunal, has referred the following question of law under Section 256(1) of the Income Tax Act, 1961 ( hereinafter referred to as Act') for the assessment year 1989-90 for opinion to this Court.
'1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was entitled to grant of depreciation at the rate of 100% on the cost of high efficiency boiler installed and used in the assessee's factory.?'
2. The brief facts of the case are as follows:-
The assessee/opposite party hereinafter referred to as 'assessee') is Cooperative Society and runs a Sugar Factory as well as a Distillery Unit. The facts of the case are that the assessee claimed 100% depreciation on a high efficiency boiler installed and used in the year relevant to the assessment year The Assessing Officer was of the view that the assessee had used bagasse as fuel instead of coal and the boiler did not have an efficiency of 75% with economizer and with coal as fuel and, therefore, the assessee was not entitled to 100% depreciation.
3. The assessee preferred an appeal against the said order before the CIT (Appeals). The C.I.T.(Appeals) restored back the issue to the Assessing Officer for providing one more opportunity to the assessee to prove that the boiler has the intrinsic efficiency of 75% if coal was used as fuel.
4. The Assessing Officer passed fresh assessment order under Section 143(3)/251 on 30.8.1991. The Assessing Officer, after verification of the relevant facts, once again came to the conclusion that the appellant has not run the boiler on coal, but, it has run only on bagasse for which the efficiency with economizer as per specification varies from 66.5% to 71.6%. He, therefore, held that the assessee is not entitled to the grant of depreciation at 100%.
5. The assessee once again preferred an appeal against the said order before the C.I.T.(Appeals). The C.I.T.(Appeals), rejected the assessee's contention vide his order dated 14.2.1992.
6. Assessee preferred an appeal against the order of C.I. T. (Appeals), before the Tribunal Tribunal allowed the appeal and held that the assessee was entitled for 100% depreciation. Tribunal held as follows:-
'We have carefully considered the sabmissions made by the Lt. Representatives of the parties and have gone through the orders of the departmental authorities. The specification of the boiler for Distillery Unit as given in Schedule-A to the agreement which has been placed at page 1 to 3 of the Paper Book inter alia reveals the following:-
The boiler should be provided with automatic pulsating grate. The coal feeing chute of the boiler should be at the low height i.e., about 3 metre from factory floor level so that coal feeding can be done through a small conveyor. The boiler efficiency should be 75% + 2.5 points with coal having 35% ash content.
Boiler efficiency with Without With
Economiser
Different fuels economizerWith Coal 67%_+2.5%75%_+2.5%Efficiency based on following fuel gross calorific value Bagasse 2250Kcal/kg.The relevant entry in the depreciation schedule provides for grant of depreciation @ 100% in case the Thermal efficiency of the Boiler is higher than 75% In case of coal fired. The aforesaid specification clearly indicates that the boiler in question with economizer has the efficiency ranging between 72.5% to 77.5%. The boiler in question is therefore, clearly covered by the specification provided for grant of depreciation on high efficiency boilers @ 100%. The mere fact that the boiler was used with the bagasse as the fuel will not disentitle the assessee front getting depreciation @ 100%, as it has been clearly mentioned in the specification of the said boiler that if it is used with the economiser, the boiler efficiency will range between 75.5%. We are, therefore, of the considered opinion that the assessee is clearly entitled to depreciation @. 100%. We will, however, like to observe that in case the assessee has claimed depreciation in the subsequent years, on the WDV after taking into consideration, the depreciation allowable at the normal rate of depreciation provided for plant because of the fact that 100% was denied in assessment year 1989-90, the depreciation so allowed if any, in the subsequent years will have to be withdrawn. In case, the assessee agrees to withdrawal of depreciation granted on the said boiler in the subsequent years, deduction by way of 100% depreciation should be allowed to the assessee in the year under consideration.'
7. Heard Sri R.K. Upadhayay, learned Standing Counsel for revenue. No one appears on behalf of the assessee. Learned Standing Counsel submitted that the entry given in the Appendix-I to the Income Tax Rules, 1962 provides, for 100% depreciation on the cost of high efficiency boiler, in case thermal efficiency is higher than 75% in the case of coal fire. He submitted that as per the assessee own showing Thermal efficiency with economizer, was 75% _ - 2.5% i. e. between 72,5% to 77.5%, therefore, it is not the case whose thermal efficiency was higher than 75%.
8. Relevant entry given in Appendix-1 to the Income Tax Rules, 1962 which provides for grant of 100% depreciation on the cost of higher cost boiler reads as follows:-
' Energy Saving Devices, being- Specialized Boilers and Furnaces:
High Efficiency Boilers (Thermal Efficiency higher than 75 per cent in case of coal fired and 80 percent in case of oil/gas fired boilers)'.
9. Under the aforesaid entry 100% depreciation on the cost of high efficiency boiler was contemplated in case if thermal efficiency was higher than 75% in case of coal fire. The word higher than 75% over rules any possibility of less than 75%. In the present case as per the assessee's own claim, boiler efficiency was ranging from 72.5% to 77.5% which gives possibility of efficiency less than 75%. Under the aforesaid entry, high efficiency boiler of which thermal efficiency is less than 75% does not fall, therefore. Tribunal has erred in allowing the 100% depreciation on the cost of the said boiler.
10. For the reasons stated above, question referred to us is answered in negative i. e. in favour of revenue and against the assessee. There shall be no order as to costs.