Ajay Kumar Mittal, J. - (1.) THIS appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short "the Act") against the order dated 31.10.2008 passed by the Income Tax Appellate Tribunal, Chandigarh Bench "A" (hereinafter referred to as "the Tribunal") in ITA No. 555/Chandi/2008, for the assessment year 1995 -96, claiming the following substantial question of law: - Whether on the facts and in the circumstances of the case, the ITAT is legally correct in holding that each item below Rs. 5000/ - is a self unit and, therefore, the depreciation @ 100% is allowable in place of 25%, ignoring the fact that these items are parts of a bigger composite unit where all expenditure to bring the assets into working conditions is to be included in determining the actual cost of fixed asset for the purpose of grant of depreciation as held by the Hon'ble Bombay High Court in the case of CIT v. Hindustan Polymers Ltd. : (1985) 156 ITR 860 (Bombay)? Briefly stated, the facts necessary for adjudication as narrated in the appeal are that the return for the assessment year 1995 -96 was filed by the assessee on 29 -11 -1995 declaring an income of Rs. 61,57,45,071 and after adjustment of brought forward losses the resulted income declared was nil. The assessment was completed under section 143(3) of the Act on 19 -3 -1998 at an income of Rs. 52,47,72,077 and after adjustment of brought forward losses, the income was assessed at nil. The assessee had claimed depreciation at the rate of 100% on the entire cost of switch gears including cable connections etc. at Rs. 39,68,74,587. The assessing officer initiated proceedings under section 147 of the Act holding that each asset would not by itself constitute a unit but was a part of bigger unit and the depreciation should have been allowed at normal rate of 25% as applicable to the plant and machinery, and not at the rate of 100% as claimed by the assessee. Accordingly, the assessment was again completed at an income of Rs. 86,87,76,780 and after adjusting the brought forward losses, the income was assessed at nil. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) (in short "the CIT(A)"). The CIT (A) vide order dated 7 -4 -2008 dismissed the appeal upholding the order of the assessing officer. On further appeal by the assessee, the Tribunal vide order dated 31 -10 -2008 accepted the appeal holding that each unit was a self unit and being a part of the bigger unit, the depreciation at the rate of 100% was to be allowed instead of 25%, as allowed by the Assessing Officer and upheld by the CIT(A). Hence, the present appeal by the revenue.
(2.) WE have heard learned counsel for the parties. The point for consideration in this appeal is regarding the allowability of rate of depreciation to the assessee -Board.
(3.) THE claim of the assessee was that the items on which the depreciation was claimed valued less than Rs. 5000/ - each and, therefore, under the proviso to Section 32 of the Act, 100% depreciation was allowable.;