Punjab-Haryana High Court
Commissioner Of Income Tax vs M/S Hemla Embroidery Mills (P) Ltd on 5 April, 2011
Author: Ajay Kumar Mittal
Bench: Adarsh Kumar Goel, Ajay Kumar Mittal
ITA No. 15 of 2009 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
ITA No. 15 of 2009
Date of Decision: 5.4.2011
Commissioner of Income Tax, Faridabad
....Appellant.
Versus
M/s Hemla Embroidery Mills (P) Ltd.
...Respondent.
CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.
HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.
PRESENT: Ms. Urvashi Dhugga, Senior Standing Counsel,
for the appellant.
AJAY KUMAR MITTAL, J.
1. This order shall dispose of ITA Nos. 15 and 23 of 2009 as according to the learned counsel for the appellant the substantial question of law involved in both the appeal is identical. For brevity, the facts are being extracted from ITA No. 15 of 2009.
2. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short "the Act") against the order dated 10.7.2008 passed by the Income Tax Appellate Tribunal, Delhi Bench "C", New Delhi (hereinafter referred to as "the Tribunal") in ITA No. 4251/D/07 for the assessment year 2004-05, claiming the following substantial question of law:-
"Whether, on the facts and in the circumstances of the case, the Hon'ble ITAT is right in law in confirming the order of the Ld. CIT(A) in allowing depreciation at the rate of 25% on electric ITA No. 15 of 2009 -2- installations, Air Conditioners and electric fan etc. fitted in the building of a Mill treating these as Plant instead of treating part of the block of furniture and fittings on which depreciation is allowable at the rate of 15% as per Income Tax Rules?"
3. The facts, in brief, necessary for adjudication as pleaded in the appeal are that the assessee filed its return on 29.10.2004 declaring an income of Rs.27,65,470/-. The assessment was completed on 11.12.2006 at a total income of Rs.35,97,740/- against which the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short "the CIT(A)"]. The CIT(A) vide order dated 14.8.2007 partly allowed the appeal deleting the disallowance made on account of depreciation on electric installation, air conditioners and electric fan and coolers by treating it as part of the plant and machinery. Feeling aggrieved, the department took the matter in appeal before the Tribunal who vide order dated 10.7.2008 upheld the order of the CIT(A) and dismissed the appeal of the revenue which gave rise to the revenue to approach this Court by way of instant appeal.
4. We have heard learned counsel for the appellant.
5. Learned counsel for the revenue submitted that the CIT(A) as well as the Tribunal were not right in allowing depreciation at the rate of 25% on electric installations, air conditioners and electric fan etc. fitted in the building of a Mill treating these as plant instead of treating part of the block of furniture and fittings on which depreciation was admissible at the rate of 15% under the Income Tax Rules. Learned counsel referred to the order of the Assessing Officer, wherein it was so ITA No. 15 of 2009 -3- held. However, the CIT(A) while reversing the order of the Assessing Officer which were affirmed by the Tribunal had held that the aforesaid appliances formed part of the plant and machinery of the assessee and, therefore, were entitled to depreciation at the rate of 25%. The findings recorded by the Tribunal to this effect are as under:-
"7. Learned CIT(A) noted that in the assessment year 2005-06, the Assessing Officer has allowed depreciation on various assets mentioned therein at the rate of 15%, on tempo at 20% as against the claim of the assessee at the rate of 25% on these assets and 40% on tempo and thus disallowed the excess depreciation charged by the assessee. It was submitted before learned CIT(A) that electric installations, air conditioners and electric fans are items which constituted the part of plant on which depreciation is to be allowed at the rate of 25%. It was submitted that the concept of plant cannot be limited to actual installation of machinery which produces goods by itself. Anything which is used for the purpose of business including any installation which facilitates the production or increase the efficiency of the business will be plant. It was, therefore, submitted that air conditioner, electric fans installed in the business are plant. Similarly electrical installations are plant. The learned CIT(A) accepted the contention of the assessee and held that the ITA No. 15 of 2009 -4- above assets form part of the plant and, therefore, entitled to depreciation at the rate of 25%.
8. Learned DR conceded that the issue is covered in favour of the assessee and against the revenue by the decision of Hon'ble Supreme Court in the case of CIT Vs. Taj Mahal Hotel (82 ITR 44) in which it was held, "that the sanitary and pipeline fittings fell within the definition of "plant" in section 10 (5) and the respondent was entitled to development rebate in respect thereof under section 10(2)(vib).
The fact that the respondent claimed depreciation on the basis that the sanitary and pipeline fittings fell under "furniture and fittings" in rule 8(2) of the Income-tax Rules, 1962, did not detract from this position. The intention of the legislature was to give the word "plant" a wide meaning."
6. In view of the aforesaid findings which have not been shown to be perverse in any manner, the assets on which depreciation was allowed were held to be the part of plant and, therefore, the rate of 25% was rightly applied.
7. Consequently, the substantial question of law is answered against the revenue. The appeals stand dismissed.
(AJAY KUMAR MITTAL)
JUDGE
April 5, 2011 (ADARSH KUMAR GOEL)
gbs JUDGE
ITA No. 15 of 2009 -5-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 23 of 2009 Date of Decision: 5.4.2011 Commissioner of Income Tax, Faridabad ....Appellant.
Versus M/s Hemla Embroidery Mills (P) Ltd.
...Respondent.
CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.
HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.
PRESENT: Ms. Urvashi Dhugga, Senior Standing Counsel, for the appellant.
AJAY KUMAR MITTAL, J.
The appeal is dismissed.
For reasons, see the order of even date recorded in ITA No. 15 of 2009 (Commissioner of Income Tax, Faridabad v. M/s Hemla Embroidery Mills (P) Ltd).
(AJA Y KUMAR MITTAL)
JUDGE
April 5, 2011 (ADARSH KUMAR GOEL)
gbs JUDGE