IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 11.11.2014 CORAM HON'BLE MR. JUSTICE R.SUDHAKAR AND HON'BLE MR.JUSTICE R.KARUPPIAH T.C.(A).Nos.726 and 807 of 2014 Commissioner of Income Tax Chennai. Appellant Vs. New Woodlands Hotel (P) Ltd. No.72-73, Dr.Radhakrishnan Salai Mylapore, Chennai 600 078. .. Respondent PRAYER: Appeals under Section 260A of Income Tax Act, 1961 against order of Income Tax Appellate Tribunal 'D' Bench, Chennai, dated 1.12.2010 made in I.T.A.No.145/Mds/2010 and C.O.No.49/Mds/2010 for assessment year 2000-2001. For Appellant : Mr. T.R.Senthil Kumar Standing Counsel For Respondent : Dr. (Mrs.) Anita Sumanth JUDGMENT (Delivered by R.SUDHAKAR, J.) Dr. (Mrs.) Anita Sumanth, learned counsel takes notice on behalf of respondent/assessee. 2. Revenue has filed these appeals challenging order of Income Tax Appellate Tribunal 'D' Bench, Chennai, dated 1.12.2010 made (2) in I.T.A.No.145/Mds/2010 and C.O.No.49/Mds/2010 for assessment year 2000-2001, raising following substantial questions of law: (i) Whether on facts and in circumstances of case, Tribunal was right in holding that vapour absorption machine is energy saving device eligible for 100% depreciation? (ii)Whether on facts and in circumstances of case, Tribunal was right in not considering fact that vapour absorption heat pump is not included in Income Tax Rules as asset eligible for 100% depreciation and, therefore, rectification order passed under Section 154 of Act was proper? 3.1. facts in nutshell are as under: respondent/assessee is in business of hotel management. return of income was filed by assessee for assessment year 2000-2001 declaring total income of Rs.27,33,360/- and Rs.8,20,010/- under Section 115JA of Income Tax Act (for brevity, Act ). return was processed under Section 143(1)(a) on 6.12.2001, determining total income at Rs.8,20,010/- under Section 115JA of Act. case was selected for scrutiny and notice under Section 143(2) of Act was served on assessee on 28.11.2001. Thereafter, assessment order under Section 143(3) of Act was passed on 11.3.2003. 3.2. Pursuant to same, Assessing Officer found that (3) depreciation on Vapour Absorption Machine, energy saving device, was allowed to assessee at rate of 100% instead of 25%. Therefore, Assessing Officer recomputed depreciation at 25% under Section 154 of Act vide order dated 26.3.2007. 3.3. Aggrieved by said order, assessee preferred appeal before Commissioner of Income Tax (Appeals). Commissioner of Income Tax (Appeals) placing reliance on Appendix-I to Income Tax Rules, 1962, which states that energy saving devices includes vapour absorption refrigeration systems, held that Vapour Absorption machine system is eligible for 100% depreciation. However, plea of assessee that Assessing Officer is not justified in passing order under Section 154 of Act was rejected by Commissioner of Income Tax (Appeals). 3.4. Assailing said order, revenue preferred appeal before Tribunal and assessee filed cross-objection. Tribunal, on merits, took view that issue as to whether Vapour Absorption Machine System is liable for 100% depreciation or not is debatable issue, which requires examination of materials, details, particulars and application of mind and cannot be rectified in proceedings initiated under Section 154 of Act and consequently, held that Assessing Officer lacked jurisdiction to exercise power under Section 154 of (4) Act. Tribunal, thus, dismissed appeal filed by Revenue and allowed cross-objection filed by assessee. 3.5. Calling in question said order passed by Tribunal, Revenue has filed these appeals on questions of law, referred supra. 4. We have heard Mr.T.R.Senthil Kumar, learned Standing Counsel for Revenue and Dr.(Mrs.) Anita Sumanth, learned counsel for assessee and perused orders passed by Tribunal and authorities below. 5. learned counsel for Revenue tried to plead that vapour absorption machine installed by assessee is part of centralized air conditioner and it cannot be used as independent machine and, therefore, depreciation at 25% should only be allowed. 6. said plea raised by revenue cannot be accepted as it is evident from order of Commissioner of Income Tax (Appeals) that Vapour Absorption System is included in Energy Saving Devices specified in Para-III, 3(iii) D(b) of Appendix-I to Income Tax Rules, 1962 and is eligible for 100% depreciation. When there is specific provision in Income Tax Rules allowing depreciation at 100% to Vapour Absorption System and same was granted by Assessing Officer at first (5) instance, subsequent proceedings for rectification under Section 154 of Act by merely stating that Vapour Absorption Heat Pump is part of Centralized Air Conditioner and liable for depreciation at 25%, without giving any reasons, runs counter to Para-III, 3(iii) D(b) of Appendix-I to Income Tax Rules, 1962. We are, therefore, of firm view that Tribunal was justified in dismissing appeal filed by revenue and allowing cross appeal filed by assessee. For foregoing reasons, we do not find any question of law, much less substantial question of law, arising for our consideration in these appeals. Accordingly, these appeals are dismissed. No costs. Consequently, M.P.No.1 of 2014 in T.C.(A) No.807 of 2014 is closed. (R.S.J.) (R.K.J.) 11.11.2014 Index : Yes Internet : Yes sasi To: 1. Assistant Registrar, Income Tax Appellate Tribunal Chennai Bench "D", Chennai. 2. Secretary, Central Board of Direct Taxes, New Delhi. 3. Commissioner of Income Tax (Appeals)-V, Chennai 34. 4. Assistant Commissioner of Income Tax (6) Company Circle IV(4), Chennai. (7) R.SUDHAKAR,J. and R.KARUPPIAH,J. (sasi) T.C.(A).Nos.726 and 807 of 2014 11.11.2014 Commissioner of Income-tax, Chennai v. New Woodlands Hotel (P) Ltd