1. The reference under s. 256(1) of the I.T. Act (in T.C. 468 of 75) has been made for obtaining the opinion of this court on the following question:
' Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee-company is a factory engaged in the manufacture of plastic goods and it is, therefore, entitled to depreciation at the higher rate of 15% under item (16) of B of III of Part I, Appendix I (Rubber and Plastic Goods Factories General machinery and plants) '
2. The assessee is a private company incorporated on 19th May, 1971, with the object of manufacturing insulated cables and wires. The assessee claimed depreciation in the return for the assessment year 1972-73 on plant and machinery and also the relief under Section 80J. The depreciation claimed was at the rate of 15% on a sum of Rs. 99,000 representing additions of plant and machinery. The ITO applied the rate of 10%. The assessee appealed to the AAC, who confirmed the depreciation as allowed by the ITO. The assessee thereafter took up the matter on appeal to the Tribunal, and the Tribunal held that the assessee was a factory engaged in the manufacture of plastic goods and, therefore, was entitled to depreciation at 15%. It is this decision that is the subject-matter of the reference.
3. The other reference raising the identical question is for the assessment year 1974-75. Excepting for the figures there is no difference in facts for that year.
4. The nature of the manufacture has 1 Jen described by the AAC as follows:
'In the instant case, the plant and machineries were worked in the factory manufacturing insulated wires and not rubber and plastic goods factories. The mere fact that the wire manufactured by the assessee had coating of plastic, would not, in my view, convert those machineries as used in rubber and plastic goods factories.'
5. The Appellate Tribunal did not interfere with this finding of the AAC, but took the view that a higher depreciation at the rate of 15% was available to the assessee only because the entry had, according to the Tribunal, to be understood in a broad manner.
6. The relevant entry runs as follows :
' III. Machinery and Plant--
(ii) special rates :
.....B. (16) Rubber and plastic goods factories--
General machinery and plant.'
7. The entry clearly shows that the general machinery and plant used in rubber and plastic goods factory will be entitled to the higher or special rate of depreciation of 15%. But in the present case the manufactured goods are insulated wires. Only for the purpose of insulation rubber or plastic materials are used and, therefore, it is not possible to treat the assessee as manufacturing rubber and plastic goods. Though the entry in this appendix has to be reasonably construed there is no question of any broad construction. If an industry does not fall within the entry it cannot be made good by any recourse to ' breadth ' of construction. In the present case, we do not consider that the Tribunal acted properly in allowing the depreciation at the rate of 15 per cent, as the industry does not fall within the entry.
8. The learned counsel for the revenue submitted that the goods manufactured by the assessee were overhead cables and wires coming within the scope of Entry III (ii) A(2) As the ITQ himself has allowed depreciation at the rate of 10% which is the general rate applicable to machinery and plant, for which no special rate has been prescribed in the Appendix, we do not think it proper or necessary to go into this aspect. The question referred is accordingly answered in the negative and in favour of the revenue. The revenue will be entitled to its costs. Counsel's fee Rs. 500 one set.