Gujarat High Court
Commissioner Of Income-Tax vs Gujarat State Fertilizers Company Ltd. on 2 February, 1993
Equivalent citations: [1993]203ITR526(GUJ)
JUDGMENT G.T. Nanavati, J.
1. The Income-tax Appellate Tribunal has referred the following three questions to this court under section 256(1) of the Income-tax Act, 1961 :
"(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the roads and culverts for the factory are plant and as such the assessee in entitled to depreciation and development rebate ?
(2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the assessee is entitled to development rebate on telephone equipment installed in the administrative office ?
(3) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the roads and culverts in township would not be a plant would be a part of building and would qualify for depreciation and development rebate ?"
2. The point which arises for our consideration as a result of questions Nos. 1 and 3 is almost covered by the decision of the Supreme Court in CIT v. Gwalior Rayon Silk Mfg. Co. Ltd. [1992] 196 ITR 149, wherein, it is held that the roads laid within factory premises as links or providing approach to the buildings to carry on the business activity of the assessee are "buildings" within the meaning of section 32 of the Income-tax Act, 1961. Thus, roads laid within the factory can be an integral part of the factory premises. So far as culverts are concerned, we are of the opinion that they are parts of roads and, therefore, they stand on the same footing as roads. As roads are required to be held as parts of the building, culverts also are required to be held as parts of the building. Therefore, roads and culverts cannot be regarded as plant but they have to be considered as buildings. For this reason, question No. 1 will have to be answered in the negative, that is, in favour of the Revenue and against the assessee; whereas, question No. 3 will have to be answered in the affirmative, that is, against the Revenue and in favour of the assessee.
3. So far as question No. 2 is concerned, what is required to be noted is that, as a matter of fact, it has been found that telephone equipment is installed in the administrative building. The Income-tax Officer, in his assessment order, has referred to the said premises as non-factory asset. The Tribunal has not recorded a different finding in this behalf. In that view of the matter, we have to proceed on the basis that telephone equipment is installed in the separate administrative building. If that is so, the provisions contained in section 33(6) will become applicable as there is no dispute that the telephone equipment was installed after March 31, 1965. After March 31, 1965, no development rebate is to be allowed in respect of any machinery or plant installed in any office premises or any residential accommodation including any accommodation in the nature of a guest house. Whether the premises in question can be said to be office premises or not is not a question which is referred to us. Therefore, on the basis of the finding recorded in this case, it will have to be held that the Tribunal was wrong in holding that the assessee was entitled to development rebate on telephone equipment installed in the administrative office. Question No. 2 will have to be answered in the negative, that is, in favour of the Revenue and against the assessee.
4. Though the Tribunal has made only one reference, we direct the office of this court to register the references arising out of assessment years 1968-69 and 1969-70 separately. We direct the office to treat Income-tax Reference No. 216 of 1980 as a reference arising out of Reference Application No. 735 for the assessment year 1968-69 and Reference No. 216A of 1980 as a reference arising out of Reference Application No. 736 for the assessment year 1969-70.
5. Reference is disposed of accordingly with no order as to costs.