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TMI Blog1979 (1) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... r refrigeration, depreciation should be allowed at the prescribed special rate of 15%. Against the order of the AAC, the revenue preferred an appeal before the Tribunal and contended that a factory building must be a building where manufacturing process was carried on with the help of plant and machinery. In the instant case, it could not be said that any manufacturing was carried on in a cold storage plant and, therefore, the building could not be held to be a factory building. Therefore, depreciation allowed at the rate of 10% as in a factory building was erroneous. It was further contended on behalf of the revenue that the general rate of depreciation prescribed for electrical machinery and equipments was only 10% and, as, admittedly, the items involved were electrical machinery and equipment, they should have allowed depreciation at the said general rate and not at the rate specially prescribed for refrigeration and air-conditioning machinery. Contentions to the contrary were made on behalf of the assessee. The Tribunal noted that the expression " factory " had not been defined in the I.T. Act but found that the assessee had in fact been treated as a factory under the Fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time within the period of twenty-three years next following the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking ;..." Appendix I, Pt. I of the I.T. Rules, 1962, contains statement of rates at which depreciation is admissible. The first item in the said Schedule relates to " buildings " and provides as follows : --------------------------------------------------------------------------------------------------------------------------------------------------- " Class of asset Rate Remarks Number on the basis of which the percentage is to be calculated on the written down value except where otherwise indicated in the case of ocean-going steamers. -------------------------------------------------------------------------------------------------------------------------------------------------- (1) (2) (3) --------------------------------------------------------------------------------------------------------------------------------------------------- I. BUILDINGS---- (1) First class substantial double these numbers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he precincts thereof-- (i) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or (ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on,........." " 2. (k) 'manufacturing process' means any process for-- (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or (ii) pumping oil, water or sewage, or (iii) generating, transforming or transmitting power, or (iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding, or (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels. " It appears that the Tribunal in the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing process was carried on with the aid of that refrigerator, that is, with the aid of the power that was needed to work that refrigerator. That aspect of the case does not appear to have been considered at all. Normally, a refrigerator is used for the purpose of storage. Even in a restaurant articles are kept in the refrigerator till they are required for sale. Mere storage as such will not be part of the manufacturing process as defined by s. 2(k) of the Factories Act of 1948. It will not even amount to treating or adapting any article with a view to its sale or disposal. If, however, a refrigerator is used for treating or adapting any article with a view to its sale, then the test required by s. 2(k) would be satisfied. " Our attention was drawn to a subsequent amendment of the Factories Act, 1948, whereby with effect from March, 1976, a cold storage plant has been specifically included in the units where a manufacturing process is carried on. But this amendment is not retrospective and cannot aid the assessee in the instant case. For the reasons given above, we hold that the Tribunal's affirmation of the order of the AAC in allowing a rate of depreciation pre ..... 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