1984 (9) TMI 33 - HC - Income Tax

Summary

Issues:
1. Whether depreciation on fibre glass used in the construction of a cold storage plant should be allowed at the rate applicable to machinery and plant.
2. Whether the Tribunal was justified in dismissing the appeal and upholding the order of the Appellate Assistant Commissioner.
3. Whether the question of changing the character of fibre glass from 'building' to 'machinery' should be referred to the court for opinion.

Analysis:
The judgment pertains to the allowance of depreciation on fibre glass used in the construction of a cold storage plant. The assessee, a registered firm, had claimed depreciation on the fibre glass during the assessment year 1978-79. Initially, the Income-tax Officer allowed depreciation on the fibre glass at a rate of 5% as part of the building. However, the Appellate Assistant Commissioner considered the cold storage construction as a specialized one where the fibre glass was integral to the plant and machinery, thus allowing depreciation at a rate of 10% applicable to machinery and plant.

The Revenue, dissatisfied with the decision, appealed before the Appellate Tribunal raising two grounds. The Tribunal dismissed the appeal, upholding the order of the Appellate Assistant Commissioner. Subsequently, the Revenue sought to refer a question of law regarding the change in character of the fibre glass from 'building' to 'machinery' to the court for opinion. However, the Tribunal found that the question did not arise from its order.

In the judgment, it was argued by the Revenue that the question of law should be deemed to have been dealt with by the Tribunal, relying on precedent. On the other hand, the assessee contended that the question was not raised before the Tribunal during the appeal. The court, after considering the arguments, referred to previous decisions where it was established that in cases where a building with insulated walls is used as a freezing chamber, even though not machinery, it is part of the air-conditioning plant of the cold storage, entitling the assessee to special depreciation on its written down value.

Ultimately, the court dismissed the application, emphasizing that requiring the Tribunal to make a reference would serve no useful purpose based on established legal precedents. The costs were assessed at Rs. 125, concluding the judgment on the matter of depreciation on fibre glass in the construction of a cold storage plant.