2010 (8) TMI 952 - HC - Income Tax

Summary

Issues involved: Interpretation of depreciation claim on steel plates and scaffolding as plant & machinery, and eligibility for investment allowance for building construction activities.

Depreciation Claim on Steel Plates and Scaffolding:
The Tribunal referred questions regarding the allowance of depreciation at 100% on steel plates and scaffolding, considering whether they qualify as plant & machinery. The Court noted the assessee's claim based on each plate and scaffolding being a complete unit, below the value threshold for 100% depreciation. The assessing officer disagreed, citing the life of the material and the individual units not constituting plant. However, the CIT (A) accepted the claim based on a precedent involving a similar issue. Upholding its own order, the Tribunal granted 100% depreciation on the steel plates and scaffolding. The Court examined precedents from the Madras and Rajasthan High Courts, determining that each steel plate and scaffolding could be considered a complete unit, eligible for 100% depreciation under Section 32. Relying on these decisions, the Court ruled in favor of the assessee, allowing the depreciation claim.

Eligibility for Investment Allowance:
Regarding the eligibility for investment allowance, the Court referenced a Supreme Court judgment stating that building construction does not qualify as producing an article or thing, thus not constituting an industrial undertaking for investment allowance. Consequently, the Court concluded that the assessee engaged in building construction activities is not entitled to investment allowance under the Act.