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Issues:
1. Depreciation on freezing chamber walls as 'plant' 2. Allowability of expenditure on transformer and service line replacement Depreciation on Freezing Chamber Walls as 'Plant': The case involved a partnership firm claiming depreciation on the freezing chamber walls as 'plant' for the assessment years 1964-65 and 1965-66. The firm purchased a cold storage business and sought depreciation at 15% on the written down value of the factory building, contending it was part of the air-conditioning plant. The Tribunal inspected the cold storage and found the walls were integral for maintaining the appropriate temperature. The court analyzed the definition of 'plant' under section 43(3) of the Income-tax Act, which includes equipment used for business purposes. It concluded that the building in question formed part of the plant for air-conditioning the cold storage, allowing depreciation at 15%. Allowability of Expenditure on Transformer and Service Line Replacement: Regarding the second issue, the Tribunal allowed the firm's claim for expenditure on replacing the transformer and service line for higher electric power. The Commissioner contended it was capital expenditure, while the firm argued it was revenue expenditure. The court applied the principle from a Supreme Court case, emphasizing that if a replacement part enhances the efficiency of the existing setup without creating a new enduring asset, it qualifies as revenue expenditure. In this case, the replacement of the service line was necessary for the cold storage's proper functioning, and no new enduring asset was created. Therefore, the expenditure was deemed revenue expenditure, not capital. Consequently, the court answered both questions in favor of the assessee, allowing depreciation on the freezing chamber walls and treating the expenditure on transformer and service line replacement as revenue expenditure.
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