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TMI Blog1998 (10) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... culverts and sewage lines, etc., could be held to be building used solely for the purpose of residence within the meaning of section 32(1)(iv)?" The assessment relates to the year 1976-77. The assessee, Tata Robins Frazer Ltd., Jamshedpur, has claimed depreciation under section 32(1)(iv) of the Act of Rs. 1,38,144 (rupees one lakh thirty-eight thousand one hundred forty-four only) at the rate of 20 per cent. on Rs, 6,90,721 (rupees six lakhs ninety thousand seven hundred twenty-one only) on account of addition to buildings, etc. According to the Income-tax Officer, the abovesaid amount was not admissible as depreciation as according to him these roads, culverts and sewage lines were not used solely by employees drawing less than Rs. 7,500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for the benefit of the lower grade employees and if incidental benefit was also available to others, the claim of depreciation under section 32(1)(iv) could not be rejected. Thus, at the instance of the Revenue, this reference has been made on the questions as referred to above. As discussed above, a short question arises as to whether the roads, culverts, sewage lines, etc., can be held to be building for the purpose of depreciation within the meaning of section 32(1)(iv) and besides this the other question also arises that if the roads, culverts and sewage lines are held to be building whether depreciation can be allowed if the said construction is carried out "within the factory premises" as links or providing approach road to car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d if facts are brought on record before the Income-tax Officer. In the instant case, such evidence has been brought on record and, therefore, we are of the opinion that depreciation has rightly been claimed. No doubt learned counsel appearing for the Revenue has strongly contended that on roads, culverts, sewage lines, etc., constructed outside the factory area, i.e., not within the factory premises but within the vicinity, the concession of depreciation under section 32 of the Act cannot be granted. Normally, what learned counsel has argued, would have some force but where it is proved that land on which the roads, culverts, sewage lines, etc., are constructed is owned by the assessee and the same is being used exclusively for the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and used for factory purposes alone indeed such concession must be extended to the assessee and to this extent the ratio laid down in the case of CIT v. Gwalior Rayon Silk Mfg. Co. Ltd. [1992] 196 ITR 149 (SC) helps the assessee. Thus, we are of the opinion that even where certain buildings of the workers are located not within the factory premises but are in the vicinity of the factory area at a short distance and for the use of the factory workers roads, culverts, sewage lines, etc., are constructed on the land owned by the assessee, indeed the assessee is entitled for depreciation on the expenditure of construction incurred by the assessee. Thus, the reference is answered in favour of the assessee. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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