- (1.) Under appeal are the judgments and orders of Division Benches of the Punjab and Haryana High Court. The assessment years involved are Assessment Years 1970-71 to 1977-78. The High Court answered in the negative and in favour of the Revenue the following question : "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the words 'corrosive chemicals' employed in entry (ii) B (7) of Para III of Part I of Appendix I to the Income-tax Rules, 1962, contemplates not only free chemicals but also non-free chemicals of corrosive effect." The assessee is in appeal.
(2.) The assessee manufactures, among other things, sugar. It claimed depreciation at the higher rate of 15% on machinery it used in the manufacture of sugar, which was detailed in a statement placed before the Income-tax Officer. It did so having regard to Item 3(ii)B(7) of Para III of Part I of Appendix I to the Income-tax Rules, 1962, which reads thus :
(3.) The assesee filed in support of its case the opinion of an expert. The Income-tax Officer rejected the assessee's claim of higher depreciation at the rate of 15% on such machinery. He declined to consider the expert opinion on the ground that the assessee was unable to produce the expert for cross-examination. He referred to the meaning of the word "chemical" and concluded that cane juice was not something which was obtained through a chemical process nor was it used for chemical effect. The contention of the assessee that, during the manufacture of sugar, the juice was treated with corrosive chemicals like sulphuric and phosphoric acids, which had corrosive effect on the sugar machinery, could not be given any importance as the quantity used was quite small and it was not those acids which came into contact with the machinery. They formed a very small part and their use was confined to a particular stage. It was the cane juice which was the main substance that came into contact with the machinery. The Appellate Assistant Commissioner dismissed the assessee's appeal. His view was that depreciation was allowable at the higher rate on such plant and machinery in which chemicals with high corrosive potentials were used for manufacturing purposes and the manufacture of sugar did not fall in such category.;