COMMISSIONER OF INCOME-TAX vs. GUJARAT STATE FERTILISERS CO.

ITR/29/1987HC GujaratGJHC24011762198720 August 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA4 pages
AI SummaryPartly Allowed

What were the facts?

This case involves an Income Tax Reference filed by the Revenue concerning assessment years 1980-81 and 1981-82. The assessee is Gujarat State Fertilizers Co. The reference presents questions of law regarding the eligibility of certain assets for investment allowance and depreciation at a higher rate. The High Court of Gujarat at Ahmedabad heard arguments from both the Revenue and the assessee. The judgment discusses various asset categories, including training centre assets, mobile equipment, fencing, compound walls, telephone equipment, and factory fans, and their respective claims for tax benefits. The procedural history indicates that these questions were referred to the High Court for its opinion at the instance of the Revenue.

What did the High Court hold?

The High Court decided each question as follows: 1. Investment allowance on training centre assets: The Court held in the affirmative, in favour of the assessee, following its own prior decisions regarding development rebate and investment allowance for training centre construction costs. 2. Investment allowance on mobile equipment: The Court held in the affirmative, in favour of the assessee, concurring with the view of other High Courts that mobile equipment like cranes and forklifts are not motor vehicles and are eligible for investment allowance. 3. Investment allowance on telephone equipment: The Court held in the negative, in favour of the revenue, as this issue was previously decided against the assessee in CIT vs. Gujarat State Fertilizer Co.Ltd. (203 ITR 526). 4. Investment allowance on fencing and compound wall: The Court held in the negative, in favour of the revenue, as these are considered part of the factory building and not plant, referencing CIT vs. G.S.F.C. (Supra). 5. Investment allowance on factory fans: The Court held in the affirmative, in favour of the assessee, following its decision in CIT vs. Tarun Commercial Mills Ltd. (151 ITR 75). 6. Depreciation at a higher rate on fencing: The Court held in the negative, in favour of the revenue, based on the decision in CIT vs. Gujarat State Fertilizers Co.Ltd., 247 ITR 690. 7. Depreciation at a higher rate on telephone equipment: The Court held in the negative, in favour of the revenue, as this was decided against the assessee in CIT vs. Gujarat State Fertilizer Co.Ltd., 203 ITR 526. The reference was disposed of accordingly.

What were the issues?

The Tribunal had to decide the following questions of law: 1. Whether, in law and on facts, the assessee is entitled to an investment allowance on training centre assets, mobile equipment, fencing, and a compound wall for assessment year 1980-81. 2. Whether, in law and on facts, the assessee is entitled to depreciation at a higher rate on fencing and telephone equipment for assessment year 1980-81. 3. Whether, in law and on facts, the assessee is entitled to an investment allowance on training centre assets, telephone equipment, mobile equipment, and factory fans for assessment year 1981-82. 4. Whether, in law and on facts, the assessee is entitled to depreciation at a higher rate on fencing and telephone equipment for assessment year 1981-82. Assessee's Contentions: The assessee argued that training centre assets are eligible for investment allowance, citing the High Court's own decision in CIT vs. Gujarat State Fertilizer Co. Ltd. (219 ITR 550) for development rebate and a subsequent decision (ITR No. 98 of 1995) for investment allowance. For mobile equipment, the assessee relied on decisions from other High Courts (CIT vs. Tribeni Tissues Ltd., CIT vs. Mahindra Ugine Steel Co.Ltd.) which held that such equipment is not motor vehicles and thus eligible for investment allowance. For factory fans, the assessee cited CIT vs. Tarun Commercial Mills Ltd. (151 ITR 75). Revenue's Contentions: The Revenue contended that investment allowance is not admissible for fencing and compound walls as they are part of the factory building and not plant, referencing the High Court's decision in CIT vs. G.S.F.C. (Supra). The Revenue also argued that telephone equipment is not eligible for investment allowance, citing CIT vs. Gujarat State Fertilizer Co.Ltd. (203 ITR 526). For depreciation on fencing and telephone equipment at a higher rate, the Revenue relied on CIT vs. Gujarat State Fertilizers Co.Ltd., 247 ITR 690 and CIT vs. Gujarat State Fertilizer Co.Ltd., 203 ITR 526 respectively.

Which sections of the Income-tax Act were involved?

Section 33

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 29 of 1987

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO ----------------------------

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 33

All 65 judgments and leading authorities on Section 33 →

Recent GST High Court judgments

Search GST case law →