Delhi High Court
Cit vs Nirula Corner House Ltd. on 6 December, 2007
Bench: M B Lokur, S Muralidhar
ORDER
1. These three appeals are directed against the common order dated 20-12-2005 passed by the Income Tax Appellate Tribunal, Delhi Bench 'B' New Delhi (Tribunal) in ITA Nos. 799/Del/1993, 5839/Del/1993 and 4492/ Del/1998 for the assessment years 1989-90, 1987-88 and 1986-87 respectively.
2. The common question of law that the revenue urges in these appeals reads as under:
Whether in the facts and circumstances, the Tribunal erred in holding cold room as plant and not building thereby allowing higher rate of depreciation/investment allowance under Section 32/32Aof the Income Tax Act, 1961
3. The assessed, which is running a hotel and restaurant, had built a bulk kitchen at Okhla, New Delhi. The assessed based its claim for depreciation and investment allowance on the premise that the kitchen itself was a plant and that in any event the cold room's which formed part thereof constituted plant, since they were essential for the business of the assessed which included the production of ice creams.
4. The assessing officer disallowed the claim for depreciation and investment allowance holding that the central bulk kitchen was not a plant.
5. The assessed filed an appeal before the Commissioner (Appeals) (Commissioner (Appeals)) who by an order dated 1-4-1998, for the assessment year 1986-87, followed an earlier order dated 27-11-1992 passed by the Commissioner (Appeals) for the assessment year 1989-90. It had been held by the Commissioner (Appeals) in that order that the entire building could not be said to be plant but that the cold rooms which were an integral part of the plant could, since they were essential to the manufacturing process. Accordingly, the assessing officer was directed to grant depreciation on the amount spent on the cold rooms. Likewise, in relation to investment allowance, the Commissioner (Appeals) followed the earlier order dated 27-11-1992 where it had been held that the cold room was approximately 19.90 per cent of the total plant was in the nature of plant and machinery and that investment allowance should be allowed to that extent.
6. The Tribunal upheld the order of the Commissioner (Appeals) on both depreciation and investment allowance. In relation to the claim under Section 80-1 of the Act, the Tribunal restored the matter to the file of the assessing officer for reconsideration.
7. It is urged by Ms. Sonia Mathur, learned standing counsel for the revenue that the question whether the bulk kitchen is an industrial undertaking for the purposes of s, 80-1 of the Act having been restored to the file of the assessing officer for reconsideration, the, question concerning the allowability of higher rate of depreciation and investment allowance under Sections 32 and 32A of the Act respectively should also be restored to the file of the assessing officer. In other words, her contention was that the determination whether the bulk kitchen is an industrial undertaking would have a bearing on whether the depreciation and investment allowance should be allowed on the cold rooms.
8. We are unable to agree with the submissions of learned Counsel for the revenue. It has been concurrently held by both the Commissioner (Appeals) as well as the Tribunal that the depreciation and investment allowance on the cold rooms should be allowed since the cold rooms were essential for the production of ice creams. The Commissioner (Appeals) in the order dated 27-11-1992, which has been followed by that authority for the assessment years with which we are concerned, has correctly concluded that even if the bulk kitchen cannot be said to be a plant, the cold room, which is essential to the manufacturing process, does answer the description of a plant and that both depreciation and investment allowance in respect thereof are permissible. We do not find any perversity in the said finding which has been concurred with by the Tribunal by following the decisions of this Court in R.S. Chemical Industries v. CIT and CIT v. Pure Ice Cream Co. .
9. In view of the conclusion that the cold room is in the facts of the present case a plant, the question concerning the allowability of the depreciation and investment allowance thereon need not depend on the answer to the question whether the, entire bulk kitchen can be considered to be an industrial undertaking for the purposes of Section 80-1 of the Act.
10. No substantial question of law arises in these appeals and they are dismissed as such.
