Rajesh Kumar, J.

The Tribunal, has referred the following question of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "Act"), for the assessment year 1989-90 for opinion to this Court :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was entitled to grant of depreciation at the rate of 100 per cent on the cost of high efficiency boiler installed and used in the assessees factory"

2. The brief facts of the case are as follows

The assessee/opposite party (hereinafter referred to as assessee) is co-operative society and runs a sugar factory as well as a distillery unit. The facts of the case are that the assessee claimed 100 per cent depreciation on a high efficiency boiler installed and used in the year relevant to the assessment year. The assessing officer was of the view that the assessee had used bagasse as fuel instead of coal and the boiler did not have an efficiency of 75 per cent with economizer and with coal as fuel and, therefore, the assessee was not entitled to 100 per cent depreciation.

The assessee preferred an appeal against the said order before the Commissioner (Appeal). The Commissioner (Appeal) restored back the issue to the assessing officer for providing one more opportunity to the assessee to prove that the boiler has the intrinsic efficiency of 75 per cent if coal was used as fuel.

The assessing officer passed fresh assessment order under section 143(3)/251 on 30-8-1991. The assessing officer, after verification of the relevant facts, once again came to the conclusion that the appellant has not run the boiler on coal, but, it has run only on bagasse for which the efficiency with economizer as per specification varies from 66.5 per cent to 71.6 per cent. He, therefore, held that the assessee is not entitled to the grant of depreciation at 100 per cent.

The assessee once again preferred an appeal against the said order before the Commissioner (Appeal). The Commissioner (Appeal), rejected the assessees contention vide his order dated 14-2-1992.

Assessee preferred an appeal against the order of Commissioner (Appeal), before the Tribunal. Tribunal allowed the appeal and held that the assessee was entitled for 100 per cent depreciation. Tribunal held as follows :

"We have carefully considered the submissions made by the learned representatives of the parties and have gone through the orders of the departmental authorities. The specification of the boiler for distillery unit as given in Schedule A to the agreement which has been placed at pp. 1 to 3 of the paper book, inter alia, reveals the following :

The boiler should be provided with automatic pulsating grate. The coal feeding chute of the boiler should be at the low height, i.e., about 3 metres from factory floor level so that coal feeding can be done through a small conveyor. The boiler efficiency should be 75 per cent + 2.5 points with coal having 35 per cent ash content.

Boiler efficiency with Economizer

With coal

With different fuels

75%+2.5%

67%+2.5%

Efficiency based on following fuel gross calorific value

Bagasse

2250 Kcal/Kg.

The relevant entry in the depreciation schedule provides for grant of depreciation at the reat of 100 per cent in case the thermal efficiency of the boiler is higher than 75 per cent in case of coal fired. The aforesaid specification clearly indicates that the boiler in question with economiser has the efficiency ranging between 72.5 per cent to 77.5 per cent. The boiler in question is, therefore, clearly covered by the specification provided for grant of depreciation on high efficiency boilers at the reat of 100 per cent. The mere fact that the boiler was used with the bagasse as the fuel will not disentitle the assessee from getting depreciation at the reat of 100 per cent, as it has been clearly mentioned in the specification of the said boiler that if it is used with the economiser, the boiler efficiency will range between 75.5 per cent. We are, therefore, of the considered opinion that the assessee is clearly entitled to depreciation at the reat of 100 per cent. We will, however, like to observe that in case the assessee has claimed depreciation in the subsequent years, on the WDV after taking into consideration, the depreciation allowable at the normal rate of depreciation provided for plant because of the fact that 100 per cent was denied in assessment year 1989-90, the depreciation so allowed, if any, in the subsequent years will have to be withdrawn. In case, the assessee agrees to withdrawal of depreciation granted on the said boiler in the subsequent years, deduction by way of 100 per cent depreciation should be allowed to the assessee in the year under consideration."

3. Heard Sri R.K. Upadhayay, learned standing counsel for revenue. No one appears on behalf of the assessee. Learned standing counsel submitted that the entry given in the Appendix-I to the Income Tax Rules, 1962, provides for 100 per cent depreciation on the cost of high efficiency boiler, in case thermal efficiency is higher than 75 per cent in the case of coal fire. He submitted that as per the assessees own showing thermal efficiency with economiser was 75 per cent + 2.5 per cent, i.e., between 72.5 per cent to 77.5 per cent, therefore, it is not the case whose thermal efficiency was higher than 75 per cent.

4. Relevant entry given in Appendix-I to the Income Tax Rules, 1962, which provides for grant of 100 per cent depreciation on the cost of higher cost (efficiency) boiler reads as follows :

"Energy-saving devices, being-

specialised boilers, and furnaces :

(d) High efficiency boilers (thermal efficiency higher than 75 per cent in case of coal fired and 80 per cent in case of oil/gas fired boilers)".

Under the aforesaid entry 100 per cent depreciation on the cost of high efficiency boiler was contemplated in case if thermal efficiency was higher than 75 per cent in case of coal fire. The words higher than 75 per cent overrules any possibility of less than 75 per cent. In the present case as per the assessees own claim, boiler efficiency was ranging from 72.5 per cent to 77.5 per cent which gives possibility of efficiency less than 75 per cent. Under the aforesaid entry, high efficiency boiler of which thermal efficiency is less than 75 per cent does not fall. Therefore, Tribunal has erred in allowing 100 per cent depreciation on the cost of the said boiler.

5. For the reasons stated above, question referred to us is answered in the negative, i.e., in favour of revenue and against the assessee. There shall be no order as to costs.