“Chlorine Toners” used for transportation of chlorine gas are essentially “gas cylinders” and are eligible for depreciation @ 60%:

Assessee claimed depreciation @ 60% on chlorine toners used for transportation of chlorine gas generated in its caustic soda plant which came to be restricted to 15% by AO on the count that such toners were part of “Plant and machinery” and cannot be categorized as “Gas cylinders”. CIT(A) allowed depreciation on such toners. On Revenue’s appeal, ITAT observed that such chlorine toners looked exactly like cylinders as was evident from its pictures. Assessee had also filed a certificate signed by Executive Director of the assessee to the effect that such toners were used for transportation of compressed chlorine gas generated in caustic soda plant, were capable of being filled up by 900 kgs. net weight of compressed chlorine gas and such toners were technically gas cylinders. It was further observed that “Gas cylinder” or “Cylinder” has been defined under “Gas Cylinder Rules, 1981” as any closed metal container having a volume exceeding 500 millilitre but not exceeding 1000 litres intended for storage and transport of compressed gas including LPG container fitted to a motor vehicle as its fuel tank but not including any other such container fitted to a transport or under carriage. As per Appendix-I to I.T. Rules, gas cylinders were entitled to depreciation @ 60%. In light of the above, ITAT held that such toners were essentially gas cylinders and accordingly, depreciation is allowable on the same @ 60%. On Revenue’s appeal Hon’ble High Court, relying on the decision in the cases of “CIT vs. Goyal MG Cases Ltd. – 296 ITR 72 (Del)” and “CIT vs. Chemplast Sanmar Ltd. – 296 ITR 81 (Mad)”, upheld the ITAT’s order. Accordingly, Revenue’s appeal was dismissed.

[CIT Vs. Gujarat Alkalies and Chemicals Ltd. – Tax Appeal No.942 of 2013]