1977 PLP 328 (SCMR)

"Whether in the facts and circumstances of the case the Tribunal was right in holding that the depreciation on plant and machinery and blocks used for printing religious books 7 under clause III(1) of the statements appended to rule 8 of the Income‑tax Rules." The High Court by its order dated the 1st of November 1968 answered the question in the negative holding that the respondent was entitled to depreciation at the rate of 10 / under rule 8(2), clause III(3) M of the Rules. The Commissioner of Income‑tax, Lahore Zone, Lahore, filed a petition for special leave to appeal against the aforesaid order of the High Court and leave to appeal was granted on the 28th of November 1969 on the ground that a question of law of general public importance had been raised which was bound to affect a large number of assessees. It may be mentioned here that during the pendency of the case in the High Court the High Court referred the case back to the Tribunal for giving a finding on the point as to whether the machinery on which depreciation had been claimed did in fact belong to the class "newspapers production plant and machinery" irrespective of the use to which it was being put. The Tribunal gave a finding that the machinery used by the respondent did in fact belong to the said class. There is thus no dispute between the parties on the following two points; (i) That the machinery used by the respondent belongs to the class "newspaper production plant and machinery". (ii) That the said machinery is being cased not for printing newspaper but for printing books on religion. The Tribunal in its order dated the 10th March 1961 has held that it was the nature of the concern or the particular use to which the machinery was put and not the nature of the machinery itself which entitled the assessee to earn a particular percentage of depreciation. General depreciation under clause III (1) was thus allowed to the respondent. The High Court on the other hand held that clause III (3) was more specific and it was this clause which applied in the case of the respondent. The only point in this case therefore is as to which of the three sub‑clauses of clause III applied to the case of the respondent. After hearing the learned counsel for the parties and carefully going through the various clauses of rule 8(2) we have come to the conclusion that the finding given by the High Court was perfectly correct. Clause III(1) has no application in the instant case as its application is excluded by the specific clause III (3)M which applies in the instant case. Clause III (2) too has no application as it applied to particular type of machinery and plants used in particular concerns mentioned in the clause. Newspaper production plant and machinery is not at all mentioned in this sub‑clause. So far as clause III (3) is concerned it applied to machinery and plant and not to concerns. Newspaper production, plant and machinery is mentioned as item No. M under this sub‑clause and the manner in which the machinery is to be used or the concern which has to use it is not all mentioned. The depreciation under this sub‑clause has therefore to be allowed on the basis of the use of the plant and machinery and not on the basis of its use for particular purpose or by a particular concern. The respondent was therefore evidently entitled to depreciation at the rate of 10 % under this clause III (3)M. The order of the High Court was therefore perfectly correct and there is nothing in this appeal which is hereby dismissed with no order as to costs. Appeal dismissed.