Calcutta High Court
Commissioner Of Income-Tax vs Kaybee Corporation on 21 April, 1994
Equivalent citations: [1996]218ITR339(CAL)
JUDGMENT Ajit Kumar Sengupta, J.
1. This reference is made by the Tribunal at the instance of the Revenue under Section 256(2) of the Income-tax Act, 1961. We have refrained the question as under in order to bring out the controversy involved in this :
"Whether, on the facts and in the circumstances of the 'case, the Tribunal was justified in law in holding that the cold storage of the assessee falls within the category of renewal energy devices within the meaning of Appendix-I, Part I-III, Machinery and Plant, Group D(10A)(vii) of the Income-tax Rules, 1962, and thereby setting aside the order Of the Commissioner on the point ?"
2. The facts as found by the Tribunal are as under :
The assessee is a partnership-firm and is engaged in the business of running a cold storage. This reference relates to the income-tax assessment of the assessee-firm for the assessment years 1984-85 and 1985-86. The Assessing Officer allowed depreciation on the cold storage plant at the enhanced rate of 30 per cent. which was applicable only to plant and machinery being renewable energy devices in the nature of solar refrigeration cold storage and air-conditioning systems. The enhanced rate of depreciation at 30 per cent. is not applicable to cold storage plants used for preserving articles stored therein where no manufacturing or production activity was carried out. The Commissioner of Income-tax (Appeals), West Bengal-VIII, being of the view that the plant and machinery installed in the cold storage of the assessee was not in the nature of a renewable energy device, initiated proceedings under Section 263 of the said Act in respect of each of the said two years and set aside the original assessment orders passed by the Income-tax Officer allowing depreciation at 30 per cent. The assessee filed an appeal to the Tribunal.
3. Before the Tribunal, the assessee referred to a certificate dated December 12, 1989, of Mr. K.N. Kumar, chartered engineer, which reads as under :
"TO WHOM IT MAY CONCERN I hereby certify that cold storages are run by renewable energy devices. In cold storage, electrical energy is used to evaporate and liquefy refrigerants like ammonia. The refrigerant liquid ammonia is stored in a vessel called receiver and is passed through an expansion nozzle where it suddenly expands, becomes a gas and very cool. Then, it passes through coils in a storage chamber, where heat transfer takes place. The liquid ammonia gains heat from the chamber resulting in lowering the temperature inside the storage chamber at the desired level for preservation of stored foodstuff. From the storage coil ammonia gas at normal temperature is passed through a compressor, which is run by electrical energy. The compressed gas becomes hot. Then, the hot compressed gas is being passed through cooling coils (water cooling) and then being cold, liquid ammonia passes through-receiver. This process is repeated over and again and, accordingly, it is called a renewable device process.
This is in reference to Harnarayan Lohia and Sons, Kaybee Corporation and Century Cold Storage, Prop. Century Laminating Co. Ltd. having office at 5, Alexandra Court, 66/1, Chowringhee Road, Calcutta-700 020."
4. It appears that the Tribunal allowed the assessee's appeal in its favour based upon the aforesaid certificate of the chartered engineer. Counsel appearing for the Revenue submitted before us that nowhere in the said certificate, the chartered engineer mentioned that he had examined the assessee's cold storage and found as a matter of fact that this particular cold storage was operated by a renewable energy device being solar energy. Furthermore, this certificate was a new evidence filed by the assessee before the Tribunal for the first time, this certificate was never filed before the Income-tax Officer and was not even filed before the Commissioner in the course of proceedings under Section 263 of the said Act. The assessee has produced no other evidence save and except the chartered engineer's certificate as aforesaid. It was, therefore, submitted that the Tribunal was clearly wrong in allowing the assessee's appeal based upon new documents in the form of the chartered engineer's certificate which was not specific and which was not even filed before the Commissioner of Income-tax. We find that there is some merit in the submission made on behalf of the Revenue. The chartered engineer has nowhere certified that he visited the cold storage run by the assessee-company and had, in fact, found that the cold storage belonging to the assessee-firm was being run by renewable energy devices. There is no other evidence on record to show that the cold storage of the assessee-firm was being operated by renewal energy devices entitling it to claim depreciation at 30 per cent. The matter is, therefore; remanded to the Tribunal. The Tribunal will give opportunity to both the sides to produce such evidence as they may desire. The Tribunal will, thereafter, decide the issue afresh after taking into consideration such evidence as may be produced both by the Revenue as well as by the assessee.
5. There will be no order as to costs.
Shyamal Kumar Sen, J.
5. I agree.