COMMISSIONER(IT) vs. MS SHIVALIK HATCHERIES

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ITA/20/2005HC Himachal PradeshHPHC01002339200503 August 2009Bench: HONOURABLE MR. JUSTICE KULDIP SINGH,HONRABLE MR. JUSTICE R.B. MISRA2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal decided the substantial question of law in favour of the assessee and against the revenue. The reasoning was based on a joint submission by the learned counsel for both parties that the issue was covered by the Division Bench's judgment dated 24.6.2008 in ITR No. 6 of 1996. In that earlier judgment, the court had held that poultry sheds were considered 'plant' within the meaning of Section 43 of the Income Tax Act, 1961, for the purposes of depreciation at the relevant time. Consequently, the appeal filed by the revenue was dismissed. No issue was expressly left undecided.

What were the facts?

This appeal by the revenue concerns assessment years 1994-95, 1995-96, and 1996-97. The revenue is challenging an order dated 24.11.2004 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench 'B', which had dismissed the revenue's appeal. The core of the dispute is whether poultry sheds used for hatching constitute 'plant' for depreciation purposes under Section 32 of the Income Tax Act, 1961. The parties jointly submitted that a previous decision by a Division Bench of the same court in ITR No. 6 of 1996, decided on 24.6.2008, covered the present substantial question of law. The assessee in the present appeal was also the assessee in the aforementioned ITR No. 6 of 1996.

What were the issues?

1. Whether, on the facts and circumstances, the Tribunal was correct in law in holding that poultry sheds used for the business of hatching constitute 'Plant' for granting depreciation, particularly in light of Supreme Court decisions holding such buildings as not 'plant' for depreciation under Section 32 of the Income Tax Act, 1961? Assessee's contention: Not recorded. Revenue's contention: Not recorded. However, the substantial question of law framed by the revenue implies their contention that poultry sheds are not 'plant' for depreciation purposes, citing Supreme Court decisions. Both parties jointly stated that the substantial question of law is covered by the decision in ITR No. 6 of 1996, where a Division Bench of the court held poultry sheds to be 'plant' within the meaning of Section 43 of the Act at the relevant time. The definition of 'plant' in Section 43(3) at the relevant time included ships, vehicles, books, scientific apparatus, and surgical equipment, but excluded tea bushes or livestock. Later amendments added 'building or furniture and fittings'.

Which sections of the Income-tax Act were involved?

Section 32,Section 43

AI-generated summary — verify with the full judgment below

ITA No. 20 of 2005.

3.8. 2009 Present: Mr. Vinay Kuthiala & Ms. Vandana Kuthiala, Advocates, for the appellant.

Mr. Lovnesh Kanwar, counsel for the respondent.

This is an appeal against the order dated 24.11.2004 passed by the Income Tax Appellate Tribunal Chandigarh Bench `B’ in I.T.A. Nos. 891, 892 & 893/Chandi/2000 Assessment years 94-95, 95-96 & 96-97 dismissing the appeal of the revenue. The appeal has been admitted on the following substantial question of law:- Whether on the facts and circumstances of the case the Hon’ble Tribunal was right in law holding that Poultry Sheds used for the business of hatching constitute `Plant’ for the purpose of granting depreciation particularly in the light of decisions of the Hon’ble Supreme Court in the following cases wherein it has been specifically held that such buildings could not be treated as plant for the purposes of depreciation u/s 32 of the I.T. Act, 1961?

The learned counsel appearing on behalf of the revenue and assessee have stated that in ITR No. 6 of 1996 decided by a Division Bench of this court on 24.6.2008, one of the questions of law referred for opinion under Section256(1) of the Income Tax Act, 1961 (for short, the Act), was as follows:- Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding the poultry sheds and water lines for sheds as `plant’ for the purposes of depreciation allowance and investment allowance under the Income-tax Act?

In ITR No. 6 of 1996, the assessment years were 1981-83 to 1985-86 and the assessee in the present appeal was also

assessee in ITR No. 6 of 1996. The Division Bench in judgement dated 24.6.2008 has noticed definition of `plant’ in sub-section (3) of Section 43, which at the relevant time was as follows:- “Plant includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business of profession but does not include tea bushes or livestock.”

Later on vide Finance Act of 2003 w.e.f. 1.4.2004, the following words were added at the end of the definition:

“Or building or furniture and fittings." The learned counsel for the parties have jointly stated that the Division Bench in judgement dated 24.6.2008 has held that poultry sheds were plant within the meaning of Section 43 of the Act at the relevant time. The learned counsel for the parties have stated that substantial question of law framed in the present appeal is covered by decision dated 24.6.2008. In light of judgement dated 24.6.2008 in ITR No. 6 of 1996, where it has been held that poultry sheds are plant within the meaning of Section 43 of the Act for purposes of depreciation, therefore, the substantial question of law framed in the present appeal is decided in favour of the assessee and against revenue and the appeal of the revenue is dismissed. ( R.B.Misra), Judge.

August 3, 2009.

( Kuldip Singh ), (Hem)

Judge.

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