2001 (10) TMI 265 - AT - Income Tax

Summary

Issues Involved:
1. Grant of 100% depreciation on poultry cages.
2. Grant of 100% depreciation on air-water circulators.
3. Validity of the Commissioner's action u/s 263.

Summary:

Issue 1: Grant of 100% Depreciation on Poultry Cages
The assessee-company, engaged in the manufacture and sale of one-day-old chicks, claimed 100% depreciation on various items including cages used in poultry farming u/s 32(1)(ii). The Commissioner, referencing the Karnataka High Court decision in Pathange Poultry Farm v. CIT [1994] 210 ITR 668, concluded that cages do not qualify for 100% depreciation as they are not independent units but part of a larger integrated system. The assessee contended that each cage is an independent, self-contained unit with no interdependence on other cages, thus qualifying for 100% depreciation. The Tribunal noted that the Assessing Officer had considered the assessee's submissions and accepted the claim, and that the view taken by the Assessing Officer was one of the possible views permissible in law.

Issue 2: Grant of 100% Depreciation on Air-Water Circulators
The Commissioner also denied 100% depreciation on air-water circulators costing Rs. 69,389, stating they were used in an integrated manner in the poultry farm. The assessee argued that each circulator is a separate unit. The Tribunal held that the Assessing Officer's view to grant 100% depreciation was permissible and could not be considered erroneous or prejudicial to the interests of the Revenue.

Issue 3: Validity of the Commissioner's Action u/s 263
The Tribunal emphasized that the provisions of section 263 cannot be invoked merely because the Commissioner disagrees with the Assessing Officer's view if it is one of the possible views. The Tribunal cited the Supreme Court decision in Malabar Industrial Co. Ltd v. CIT [2000] 243 ITR 83, which held that when an Income-tax Officer has taken one of the courses permissible in law, it cannot be treated as erroneous or prejudicial to the interests of the Revenue. The Tribunal concluded that the Assessing Officer had adopted a permissible course, and thus, the Commissioner's action u/s 263 was not justified.

Conclusion:
The Tribunal set aside the order of the Commissioner passed u/s 263 and restored the order of the Assessing Officer, allowing the assessee's appeal.