Calcutta High Court
Commissioner Of Income Tax vs New India Sugar Mills Ltd. on 15 May, 1990
Equivalent citations: (1992)105CTR(CAL)246
JUDGMENT
BHAGABATI PRASAD BANERJEE, J. :
The Tribunal has referred the following questions of law to this Court under s. 256(1) of the IT Act, 1961 :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that expenditure under the head Tea, Tiffin, food, salary to guest house staff and depreciation on guest house was allowable as revenue expenditure ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that contribution to Molasses Storage Reserve Fund Account was an allowable revenue expenditure ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was entitled to relief under s. 80G of the IT Act on the donation made to Vishwa Mangal Trust ?
4. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was entitled to extra shift depreciation on Transformer, pumping set and tubewells ?"
The assessment year involved is 1977-78 for which the relevant period of accounting is the year ended on 30th June, 1976.
2. The first question is now concluded by a decision of this Court in the case of CIT vs. Bharat Sugar Mills Ltd. in IT Ref. No. 164 of 1985 wherein the judgment was delivered by this Court on 23rd April, 1990. Following the said decision, this question of law is answered in the affirmative and in favour of the assessee.
3. The second question is also concluded by a decision of this Court in the case of CIT vs. New India Sugar Mills Ltd. in assessees own case for the earlier year in IT Ref. No. 166 of 1985 wherein judgment was delivered by this Court on 12th April, 1990. Following the said decision, this question of law is also answered in the affirmative and in favour of the assessee.
4. The Third question is also concluded by a decision of this Court in the case of CIT vs. Upper Ganges Sugar Mills Ltd. (1985) 154 ITR 308 (Cal). Following the said decision, this question of law is answered in the negative and in favour of the Revenue.
5. So far as the fourth question is concerned, the reasons given by the ITO in not allowing the extra shift depreciation claimed by the assessee were as follows :
"Extra shift depreciation allowance has been claimed on hydraulic work as mentioned above against which no extra shift allowance is allowable as per rules. Again no extra shift allowance in allowable on transformer. Appendix I to r. 5 of the IT Rules in dealing with extra shift allowance states that in respect of certain items of machinery and plant to which the rate depreciation of 10% applies shall not be allowed. Item (1) mentions Electrical Machinery Switch gear and instruments transformers and other stationery plant and wiring and fitting of electric light and fan installations."
The Tribunal referred to the order dt. 19th March, 1981 passed by C-Bench of the ITAT, Calcutta in ITA No. 2795/Cal/1978-79 in the case of Bharat Sugar Mills Ltd. (supra) for the asst. yr. 1976-77 wherein the Tribunal held that the electric motor which was a part and parcel of the plant and machinery could not be looked at as a separate item for the purpose of extra shift allowance. Accordingly, the Tribunal directed the ITO to allow the same. In this connection reliance was placed on a decision of the Division Bench of the Orissa High Court in the case of CIT vs. Electro Steel Casting Ltd. (1981) 130 ITR 25 (Ori) wherein it was held by the Division Bench of the Orissa High Court as follows :
"Hydraulic works, pipe lines and sluices are items which are not defined under the IT Act, 1961 or under the IT Rules, 1962. Their meanings have, therefore, to be gathered from the context in which those items occur in Appendix I of the IT Rules, 1962, the tubewells and pipelines for sanitary and water supply installations inside a factory manufacturing steel castings cannot be described as hydraulic works, pipelines and sluices. Consequently, the prohibition against granting extra shift allowance which applies only to hydraulic works, pipelines and sluices used in hydraulic electric projects or other hydraulic works does not apply to tubewells and pipelines used in a factory.
Therefore, the sanitary and water supply installations inside a factory do not come under the head hydraulic works, pipelines and sluices as described under item III(ii)A(1) of Appendix I to IT Rules, 1962, and are entitled to extra shift depreciation allowance."
6. The Revenue could not cite any other decision either to the contrary or to distinguish this decision. For the reasons given int the said judgment, we respectfully agree with the views expressed by the Division Bench of the Orissa High Court. Following the said decisions, this question of law is answered in the affirmative and in favour of the assessee.
There will, however, be no order as to costs.
SUHAS CHANDRA SEN, J. :
I agree.