Moulds owned by Philips India as a part of block assets for purpose of Business are entitled to Depreciation at 30%: ITAT [Read Order]

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the moulds owned by Philips India as a part of the block assets for the purpose of business are entitled to depreciation at 30%.

The assessee company is in the business of manufacturing, selling, and trading electronic and electrical products, electronic medical equipment, and the development of embedded software and services. The assessee has claimed depreciation at 30% on moulds instead of 15%.

According to the Assessing Officer, the depreciation at 30% is only available on the moulds which are used exclusively in rubber and plastic factories and since the assessee has no such rubber and plastic factory, the depreciation on moulds has to be allowed at 15% as applicable to the normal items of plant and machinery.

The Assessing Officer upon called to reply stated that the assessee is engaged in the business of manufacturing/sub-manufacturing of consumer life style products and light-products and the moulds are used for the manufacturing of various plastic products and therefore, the assessee is eligible for depreciation @ 30%.

In the case of Honda Motorcycle & Scooter India (P.) Ltd. vs ACIT in ITA No. 3237/DEL/2011 has decided the issue in favour of the assessee. The facts of the case as decided by the Coordinate Bench are materially same as that of the assessee.

The Two-member bench comprising of Rajesh Kumar (Accountant member) and Sonjoy Sarma (Judicial member) held that it is immaterial whether the plastic /rubber moulds were used in the factory premises of the assessee or vendors. Prime requirement is that moulds should be owned by the assessee, the same should be part of block assets shown by the assessee and these were put to use for the purpose of business of the assessee and the three requisite conditions have been fulfilled by the assessee in the present case and thus it is entitled to claim depreciation at 30%.

Therefore, the order of the Commissioner of Income Tax (Appeal) was set aside and the Assessing Officer was directed to allow the depreciation at 30%. Thus, the appeal of the assessee was allowed.

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