1990 (4) TMI 92

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..... loss of Rs. 2,10,893. Assessment was framed on 23-2-1984, u/s. 143(3), at 'nil' income. The assessee's claim for initial depreciation u/s 32(1)(iv) was disallowed by the ld IAC(A), with the following observations:--- " 4. The assessee-company claimed initial depreciation on canteen for low-paid employees u/s. 32(1)(iv) of the IT Act. The factors of this case are that the assessee-company is only lessor and has leased out the building, plant and machinery to M/s Bakeman Home Products. Therefore, the canteen being in the premises of the factory is essential for the use of M/s Bakeman Home Products and not the assessee's employees. Sec 32(1)(iv) allows initial depreciation on certain buildings which are used solely and mainly for the welfar .....

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..... g parties have been heard and record carefully perused. The assessee owned a building, plant and machinery which was leased out to M/s Bakeman Home Product, on 31-8-1977 and during the relevant period, the lease was existing. The lessor, i.e. the assessee, was receiving lease money, i.e. premium, from the lessee M/s Bakeman Home Products and, no doubt, according to the revenue, such receipt was assessable under the head 'other sources' but the Tribunal ultimately held that such receipt was taxable under the head 'business'. The employees of the lessee required a canteen to be run from the premises. To this effect, understanding is seen to have taken place on 9-1-1979 between the assessee and the workers and the premises for canteen were con .....

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..... t of the building to the assessee in respect of the previous year of erection of the building. " We are concerned with assessment year 1981-82. The premises was constructed after 31-3-1961 and was also being used as canteen for the welfare of the low-paid employees during the relevant period. In our considered view, the assessee satisfied all the conditions necessary for claiming initial depreciation and the ld IAC(A) should not have denied the assessee's claim on some untenable ground. M/s Bakeman Home Product was a lessee of the assessee in respect of building, plant and machinery, where the canteen was situated. It is not the case that the canteen was not being used for that purpose by the workers. In the peculiar circumstances of the .....

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