1981 (2) TMI 79 - HC - Income Tax

Summary

Issues involved: Depreciation allowance on building and thermocole insulation in a cold storage facility.

Depreciation on thermocole insulation:
The High Court held that thermocole insulation is covered by the definition of "plant" as per section 43(3) of the Income-tax Act. The court referred to a previous case and stated that the definition of "plant" is inclusive and does not exclude items normally included in it. The court concluded that the thermocole insulation qualifies as plant and the assessee is entitled to 15% depreciation on its costs.

Depreciation on building:
Regarding the depreciation on the building, the Tribunal did not provide reasons for considering the cold storage building as a factory building. The court examined the definition of "factory buildings" under the Factories Act, emphasizing that the essence of a factory lies in the manufacturing process carried out on the premises. The court agreed with the Tribunal's decision that the cold storage facility involves a manufacturing process aimed at preserving food materials. The court noted that the cold storage is subject to the control and supervision of the Factories Inspector and has been recognized as a "factory" under the Factories Act. Consequently, the court answered the first question in favor of the assessee, affirming that the cold storage building qualifies as a factory building for depreciation purposes.

Conclusion:
The High Court ruled in favor of the assessee, allowing 15% depreciation on the thermocole insulation costs and confirming the cold storage building's classification as a factory building eligible for depreciation.