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Issues:
- Assessment of depreciation and development rebate on bottles and shells as "plant" for income tax purposes. Analysis: The judgment involves three income tax reference cases concerning the assessment years 1969-70, 1970-71, and 1971-72. The assessee, a soft drink manufacturer, claimed depreciation on bottles and shells as they constituted "plant" under section 43(3) of the Income-tax Act, 1961. Initially, the Income Tax Officer (ITO) rejected the claim, considering bottles and shells as capital assets. However, the Appellate Authority Commission (AAC) allowed the claim, stating that the bottles and shells were not stock-in-trade but constituted "plant" owned by the assessee. The Tribunal upheld this view, allowing depreciation and development rebate on the bottles and shells. The Commissioner, dissatisfied with the Tribunal's decision, filed an application seeking a reference to the High Court on whether bottles and shells could be considered "plant" for depreciation purposes. The High Court noted that the term "plant" under section 43(3) includes various items used for business purposes, but its definition is not exhaustive. The Court emphasized that determining whether a particular article qualifies as "plant" depends on the specific facts of each case. Despite the assessee's argument that the issue was self-evident based on Supreme Court decisions, the Court found it to be a mixed question of fact and law. The High Court acknowledged that while the definition of "plant" provides illustrative examples, the categorization of an item as "plant" requires a case-specific analysis. The Court highlighted that the lack of precedent on whether bottles or shells constitute "plant" necessitated a thorough legal examination. Citing previous judgments, the Court emphasized that if a question of law is substantial and lacks a clear answer, a reference should be made for detailed consideration. Consequently, the High Court directed the Tribunal to refer the question of whether bottles and shells qualify as "plant" for depreciation and development rebate purposes. In conclusion, the High Court allowed the applications, instructing the Tribunal to refer the question of law regarding the classification of bottles and shells as "plant" within three months. The Court emphasized the need for a comprehensive analysis due to the substantial nature of the legal issue, indicating that a detailed examination of precedent and analogies was essential for a correct determination.
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