ARIJIT PASAYAT ( 1 ) AT the instance of Revenue, following questions has been referred for opinion of this Court under Section 256 (1) of the Income-tax Act, 1961 (in short act ) by the income-tax Appellate Tribunal (in short Tribunal ): -. " (1) Whether on the facts and the circumstances of the case, the Tribunal was justified in law in holding that the Diesel generating set costing Rs. 6, 50, 440. 00 is entitled to depreciation u/s. 32 (1 ) (vi) of the Income-tax Act, 1961 for the A. Y. 1975-76. (2) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in directing the Income-tax Officer to allow the assessee s claim for depreciation u/s 32 (1 ) (vi) of the Income-tax Act, 1961 in respect of machinery for manufacture of gears under item No. 10, Machine tools in the ninth Schedule of the Income-tax Act, 1961 ?"the dispute relates to the assessment year 4975-76. Relevant previous year ended on 31/12/1974. ( 2 ) BACKGROUND facts, in a nutshell, are as follows: assessee, a public limited company, at the relevant point of time was carrying on business of manufacturing transmission equipments. A claim under Section 32 (1 ) (vi) of the Act for depreciation at the rate of 20% was made, in respect of plant and machinery installed and commissioned during the year under question, the cost of which was Rs. 14, 63, 415. 00. The machineries were of two categories, viz. (i) machinery for manufacture of gears, and (ii) diesel generating set, costs of which were Rs. 8,12,975. 00 and Rs. 6,50,440. 00 respectively. Assessee s contention was that gears manufactured by it were being used in and were part and parcel of item Nos. 8,9and 14 of the Ninth Schedule. Income-tax Officer (in short i. T. O. ) rejected this contention. Similarly, it was held that diesel generating set, costing Rs. 6,50,440. 00, was not an admissible item for initial depreciation, in-terms of Section 32 (1-) (vi), which was inserted by the Direct Taxes (Amendment) Act, 1974 w. e. f. 1/04/1975. Matter was carried in appeal before the Appellant Assistant Commissioner of income-tax (in short a. A. C. ). Views of the Income-tax Officer were affirmed by the a. A. C. Matter was carried in further appeal before the Tribunal. Matter was carried in appeal before the Appellant Assistant Commissioner of income-tax (in short a. A. C. ). Views of the Income-tax Officer were affirmed by the a. A. C. Matter was carried in further appeal before the Tribunal. Assessee s stand was that in respect of both the items, conclusions of the I. T. O. as well as the A. A. C. were not in order. Reference was made to item No. 10 of the Ninth Schedule i. e. "machine Tools" to support its claim. Reference was also made to a notification in the gazette of India Extraordinary dated 14/04/1976, according to which, the list of "machine Tools" for the purposes of licensing policy shall include component parts of "machine Tools" specified. Stand of the Revenue, on the other hand, was that both i. T. O. and the A. A. C. were justified in their conclusions. Tribunal noted the details of the machinery, which were used for manufacture of gears. They were as under-Reference was also made to the notification in the Gazette of India Extraordinary dated 14/04/1976 and the component parts of machine tools, which were specified as under:- "item No. 9 Broaching Machines item No. 10 Gear Cutting and Finishing Machines: xxxxxxxxxxx (4) Gear shapers item No. 19: Machine Tool Accessories: xxxxxxxxxxx xxxxxxxxxxx (4) Single Spindle Chucking automates upto 380 mm swing. "on consideration of the entires, Tribunal was of the view that assessee was entitled to succeed. So far as the diesel generating set is concerned, it was held that, there being no dispute that diesel generating set was used for generating electricity, the said claim was to be allowed. So far as the claim in respect of machinery for manufacture of gears is concerned, with reference to the entry i. e. Item No. (10) "machine Tool s" in the Ninth Schedule and the classification indicated in the Gazette of India Extraordinary dated 14/04/1976, it was held that the claim was admissible. On being moved under Section 256 (1) of the Act, reference as aforesaid has been made. ( 3 ) WE have heard learned counsel for the Revenue and the learned counsel for the assessee. It is the stand of learned counsel for the Revenue that the machineries, which were used cannot be covered by Item No. 10 of the Ninth Schedule i. e. "machine Tools". ( 3 ) WE have heard learned counsel for the Revenue and the learned counsel for the assessee. It is the stand of learned counsel for the Revenue that the machineries, which were used cannot be covered by Item No. 10 of the Ninth Schedule i. e. "machine Tools". Further it is submitted that, mere fact that there was generation of electricity, is not sufficient for grant of relief under Section 32 (1 ) (vi) of the Act. Learned counsel for the assessee, on the other hand, referred to the entries and the notification, and submitted that the conclusions of the Tribunal were in order. ( 4 ) SO far as the first issue is concerned, it is to be noted that the gears manufactured were being used in and were part and parcel of item Nos. 8,9 and 14 of the Ninth schedule. Even otherwise, Item 10 of the 9th Schedule, i. e. "machine Tools" covers three items. There has to be continuity of the process and for the same the machineries were indispensable. Additionally, the list of Machine Tools for the purposes of licensing Policy throws considerable light on the controversy. The Tribunal was, therefore, justified in its conclusion about the claim of depreciation under Section 32 (1) (vi)oftheact. So far as the question relating to generator set is concerned, it has to be noted that the conclusion of the Tribunal that, mere generation of electricity was sufficient, is not tenable. Nevertheless, in view of the accepted position, that the set was also clearly and inextricably linked with the machinery for manufacturing gears and process of manufacturing, the claim of the assessee was in order and the assessee was entitled to depreciation under Section 32 (1 ) (vi) of the Act. The obvious answer to both the questions referred, is in the affirmative, in favour of the assessee and against the Revenue.