9911796707
|
Home
Issues:
1. Entitlement to depreciation on water storage tank under Indian Income-tax Act. 2. Interpretation of the term "plant" in section 10(2)(vi) of the Act. 3. Analysis of the schedule to rule 8 for depreciation allowance. 4. Comparison with judicial precedents regarding the definition of "plant." 5. Final decision on the claim for depreciation. Analysis: The judgment revolves around the issue of whether the assessee is entitled to claim depreciation on a water storage tank constructed for supplying water for irrigation purposes. The assessee claimed depreciation under clause (vi) of sub-section (2) of section 10 of the Indian Income-tax Act, 1922. Initially, the Income-tax Officer disallowed the claim, stating that the asset was not provided for under rule 8 and was not used exclusively for business purposes. However, the Appellate Assistant Commissioner allowed the claim, considering the tank as a "plant" akin to assets in salt works. The Commissioner adjusted the depreciation rate to 2% and allowed only half of the claim due to partial business use. The Tribunal, on appeal by the department, disagreed with the Appellate Assistant Commissioner, stating that the schedule to rule 8 did not include water storage tanks for depreciation. The Tribunal emphasized that analogies with assets in salt works were not applicable. The Tribunal's decision led to a reference to the High Court under section 66(1) of the Act for legal interpretation. The counsel for the assessee argued that the water storage tank should be considered a "plant" based on dictionary definitions and the broad interpretation of the term in the schedule to rule 8. The High Court, however, rejected the assessee's claim. The court analyzed the term "plant" in section 10(2)(vi) and ruled that the primary and extended meanings of the term did not encompass a container for stock-in-trade, as in the case of the water storage tank. The court also dismissed the argument based on the schedule to rule 8, stating that the mention of reservoirs in salt works did not extend to all water storage tanks. The court referenced a House of Lords case to emphasize that "plant" refers to apparatus or instruments used in business operations, excluding stock-in-trade storage. In conclusion, the High Court upheld the Tribunal's decision, denying the depreciation claim on the water storage tank. The judgment clarified that the water storage tank did not qualify as a "plant" under the Indian Income-tax Act, leading to a negative response to the referred question. The assessee was directed to bear the department's costs, affirming the correctness of the Tribunal's decision.
|
