COMMISSIONER OF INCOME-TAX vs. POWER BUILD LTD.,

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ITR/307/1987HC GujaratGJHC24012037198708 March 2001Author: HONOURABLE MR. JUSTICE J.M.PANCHAL,HONOURABLE MR. JUSTICE MOHIT S. SHAH3 pages

AI SummaryAllowed

What did the High Court hold?

The High Court held that the Tribunal was right in law and on facts in directing depreciation at the rate of 5% on the canteen building. The Court's reasoning was based on its own earlier decision in the assessee's case, CIT Vs. Power Build Ltd., ITR No. 335 of 1984, decided on December 20, 1999. This earlier decision, in turn, referred to the Madras High Court's judgment in CIT Vs. Engine Valves Ltd. (126 ITR 347) and took the view that a canteen building is an integral part of a factory building and thus entitled to the higher depreciation rate applicable to factory buildings. The reference was answered in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of with no order as to costs. No issue was expressly left undecided.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench "B", referred a question of law to the High Court of Gujarat at Ahmedabad at the instance of the Revenue concerning Assessment Year 1981-82. The assessee, Power Build Ltd., contended that depreciation on its canteen building should be allowed at 5%, treating it as a factory building. The Income Tax Officer (ITO) allowed depreciation at 2.5%. The Commissioner of Income Tax (Appeals) directed the ITO to compute depreciation at 5%. The ITAT confirmed this order, following its earlier decision in the assessee's own case. The Revenue challenged the ITAT's decision before the High Court.

What were the issues?

1. Whether, the Appellate Tribunal is right in law and on facts in directing depreciation to be given at the rate of 5% on the canteen building as against depreciation at 2.5% allowed by the Income-tax Officer? Assessee's Contention: The assessee argued that the canteen building should be treated as a factory building and therefore entitled to depreciation at the rate of 5%. Revenue's Contention: The Revenue contended that the depreciation on the canteen building should be at the rate of 2.5%, as allowed by the Income Tax Officer. The judgment does not record specific arguments from the Revenue beyond what is implied by the reference, nor does it name any authorities or precedents relied upon by the Revenue.

Which sections of the Income-tax Act were involved?

Section 10(2)(vi) (implied by depreciation context, though not explicitly stated in the provided text)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 307 of 1987

For Approval and Signature:

Hon'ble MR.JUSTICE J.M.PANCHAL and Hon'ble MR.JUSTICE M.S.SHAH

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

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

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?

Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus POWER BUILD LTD., -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner

--------------------------------------------------------------

CORAM : MR.JUSTICE J.M.PANCHAL and MR.JUSTICE M.S.SHAH

Date of decision: 08/03/2001

ORAL JUDGEMENT (Per : MR.JUSTICE J.M.PANCHAL)

At the instance of Revenue, the Income Tax Appellate Tribunal, Ahmedabad Bench "B" has referred following question of law for the opinion of this Court relating to Assessment Year 1981-82:-

"Whether, the Appellate Tribunal is right in law and on facts in directing depreciation to be given at the rate of 5% on the canteen building as against depreciation at 2.5% allowed by the Income-tax Officer?"

During the course of assessment proceedings for the Assessment Year 1981-82, the assessee contended that depreciation on canteen building should be allowed at the rate of 5% as it should be treated as a factory building. The Income Tax Officer granted deduction at the rate of 2.5%. The Commissioner of Income Tax (Appeals) however, directed the Income Tax Officer to compute depreciation at the rate of 5% on canteen building. The Appellate Tribunal has confirmed the order of the Commissioner of Income Tax following its earlier decision in assessee's Division Bench comprising Hon'ble Mr.Justice B.C. Patel and Hon'ble Mr.Justice K.M.Mehta, wherein after referring the rate of 5% on the canteen building as against depreciation at the rate of 2.5% allowed by the Income Tax Officer. The reference is therefore answered in the affirmative i.e. in favour of the assessee and against the Revenue. The reference stands disposed of accordingly with no order as to costs. ---

(J.M.Panchal,J.) (M.S.Shah,J.)

*/Mohandas

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