1993 (3) TMI 140 - AT - Income Tax

Summary

Issues Involved:

1. Withdrawal of extra shift depreciation allowance on ice manufacturing plant and machinery for assessment years 1981-82 to 1983-84.
2. Disallowance of extra shift depreciation allowance on cold storage plant for assessment year 1984-85.
3. Investment allowance on cold storage chamber for assessment years 1985-86, 1986-87, and 1987-88.
4. Disallowance of extra shift depreciation allowance on cold storage chamber for assessment years 1985-86, 1986-87, and 1987-88.
5. Disallowance of Rs. 5,000 under the head "general charges" for assessment year 1985-86.
6. Addition to the trading account for assessment year 1987-88.

Detailed Analysis:

1. Withdrawal of Extra Shift Depreciation Allowance on Ice Manufacturing Plant and Machinery for Assessment Years 1981-82 to 1983-84:

The assessee, a public limited company engaged in cold storage and ice manufacturing, had initially claimed and was granted extra shift depreciation allowance at 10% on the plant and machinery used for ice manufacturing. However, the ITO later withdrew this allowance under section 154 of the IT Act, citing that according to item III(ii) B(13) of the depreciation schedule, extra shift depreciation was not allowable on refrigeration plant. The ITO considered the ice manufacturing machinery as refrigeration plant and relied on the Punjab & Haryana High Court decision in CIT vs. Gurinder Singh Karien. The CIT(A) upheld this view.

Upon further appeal, the assessee argued that the entry in the depreciation schedule did not apply to refrigeration plant but to "refrigeration plant containers, etc.," and that the issue was debatable. The Tribunal agreed with the assessee, stating that the entry did not expressly refer to ice manufacturing machinery and was debatable. The Tribunal concluded that the ITO did not have jurisdiction to invoke section 154 and that the extra shift depreciation allowance was rightly granted in the original assessments.

2. Disallowance of Extra Shift Depreciation Allowance on Cold Storage Plant for Assessment Year 1984-85:

The ITO disallowed the extra shift depreciation allowance on the cold storage plant, arguing it fell under the category of refrigeration plant, which was excluded by the depreciation schedule. The CIT(A) held that the cold storage chamber was not a plant but part of buildings and thus did not qualify for the allowance.

The Tribunal, however, held that the cold storage chamber should be treated as a general item of plant and machinery and not as part of buildings. Therefore, the assessee was entitled to the extra shift depreciation allowance on the cold storage chamber.

3. Investment Allowance on Cold Storage Chamber for Assessment Years 1985-86, 1986-87, and 1987-88:

The Tribunal followed its previous decision in the assessee's case for the assessment year 1983-84, where it was held that the cold storage chamber did not manufacture or produce any article or thing and thus could not be treated as a plant. Consequently, the investment allowance claim was disallowed for these years.

4. Disallowance of Extra Shift Depreciation Allowance on Cold Storage Chamber for Assessment Years 1985-86, 1986-87, and 1987-88:

For the same reasons stated in the appeal for the assessment year 1984-85, the Tribunal upheld the assessee's claim for extra shift depreciation allowance on the cold storage chamber for these years.

5. Disallowance of Rs. 5,000 under the Head "General Charges" for Assessment Year 1985-86:

The Tribunal noted that the CIT(A) had deleted a similar disallowance for the assessment year 1984-85 and that the Department had not appealed against that order. Consequently, the Tribunal deleted the disallowance for the assessment year 1985-86 as well.

6. Addition to the Trading Account for Assessment Year 1987-88:

The ITO had added Rs. 16,660 to the trading account due to excessive wastage claims, which the CIT(A) adjusted to Rs. 15,000. The Tribunal, considering the facts and circumstances, reduced the addition to Rs. 10,000, granting a relief of Rs. 5,000 to the assessee.

Conclusion:

The appeals for the assessment years 1981-82 to 1983-84 were allowed, the appeal for the assessment year 1984-85 was allowed, and the appeals for the assessment years 1985-86 to 1987-88 were partly allowed.