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Issues involved: Interpretation of the term "building" for the purpose of allowing depreciation on drains, culverts, roads, etc. under section 32 of the Income-tax Act, 1961.
Summary: The case involved a dispute regarding the allowance of depreciation on drains, culverts, roads, etc., claimed by the assessee company for the assessment years 1965-66 and 1966-67. The Income-tax Officer disallowed the claim, stating that the construction of these assets did not create depreciable assets. The Appellate Assistant Commissioner considered these assets as "buildings" based on their ordinary meaning and directed the allowance of depreciation. However, the department argued that these assets did not fall under the common parlance understanding of "building." The Tribunal, following the common man's interpretation, ruled against considering drains, culverts, roads, etc., as buildings, leading to disallowance of depreciation. The High Court disagreed with the Tribunal's reasoning, emphasizing that the term "building" should be understood in the context of the Income-tax Act and the specific circumstances of each case. It highlighted that not all assets owned by an assessee are eligible for depreciation under section 32, which allows depreciation only on specific assets used for business or profession purposes. The Court found that the authorities below did not address the core issues and directed the matter back to the Tribunal for a thorough examination of whether the assets in question qualify as "buildings" and were used for business purposes, as per section 32. The Court instructed the Tribunal to gather primary facts, consider evidence from both parties, determine if the assets are indeed "buildings," assess their usage for business purposes, and decide on the admissibility of claimed depreciation. Additionally, the Tribunal was tasked with evaluating the applicability of a previous court judgment to the case. As the High Court was unable to provide a definitive answer due to the lack of factual clarity, the reference was disposed of without costs. *By DEB., J.:* The interpretation of the term "building" for depreciation purposes under the Income-tax Act, 1961 was scrutinized, emphasizing the need to consider the specific context and circumstances of each case. The Court highlighted the importance of assessing factors such as construction nature, purpose, and usage in determining whether assets qualify as "buildings" eligible for depreciation under section 32. *By SUDHINDRA MOHAN GUHA J.:* Concurred with the decision and directions provided by DEB., J.
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