Income-tax---

----Depreciation---Plant---Manufacture of soft drinks---Bottles and containers---Constitute plant within meaning of S.43(3)---Entitled to 100 per cent. depreciation on new purchases of bottles and containers---Indian Income Tax Act, 1961, Ss. 32(l)(ii) & 43(3).

The assessee, a private limited company, which derived income from sale of cola, soda and ice boxes, claimed depreciation of Rs.29,55,813 on bottles at 100 per cent. under section 32(1)(ii) of the Income Tax Act, 1961, as the purchase price of each bottle was less than Rs.750. The Income tax Officer disallowed the depreciation on the ground that bottles could not be considered as plant. On appeal, the Commissioner of Income-tax (Appeals) held that the bottles purchased by the assessee constituted plant under section 43(3) and allowed 100 per cent depreciation. The Tribunal dismissed the appeal of the Revenue. On a reference:

Held, that the' assessee 0was entitled to 100 per cent. depreciation on new purchases of bottles and containers worth Rs.29,55,813

CIT v. Jai Drinks (P.) Ltd. (1988) 173 ITR 100 (Raj.); CIT v. National Air Products Ltd. (1980) 126 ITR 196 (Delhi) and CIT v. Sri Krishna Bottlers (Pvt.) Ltd. (1989) 175 ITR 154 (AP) fol.

CIT v. Taj Mahal Hotel (1971) 82 ITR 44 (SC) ref..

S.K. Sharan for the Commissioner.

Pawan Kumar, Senior Advocate with Chiranjiva Ranjan, Raj Kishore Prasad, Mrs. Amita Roy Choudhary and Tej Bahadur Roy for the Assessee.

JUDGMENT

At the instance of the Revenue, this Court under section 256(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), on an application for the assessment year 1979-80, asked the Tribunal to refer the following question to this Court for its opinion:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in directing to allow depreciation at cent per cent. new purchases of bottles and containers worth Rs.29,5,813?"

The assessee is a private limited company and it derives income from sale of cola, soda and ice boxes, etc. It had claimed Rs.29,55,813 as depreciation under section 32(1)(ii) of the Act, which was allowed 100 per cent., as the purchase price of each bottle was less than Rs.750. The Income tax Officer held that the bottles could not be equated with plant and depreciation could not be allowed, as claimed by the assessee. On appeal, however the Commissioner of Income-tax referring to a decision of the Delhi High Court in CIT v. National Air Products Ltd. (1980) 126 ITR 196 held that the bottles purchased by the assessee constituted plant and the assessee was entitled to depreciation at 100 per cent. as claimed. On appeal being preferred before the Tribunal by the Revenue the same was also dismissed. As noted above the question has been referred for our decision.

Mr. Pawan Kumar, learned counsel appearing on behalf of the assessee, referred to two decisions: one of the Rajasthan High Court in CIT v. Jai Drinks (P.) Ltd. (1988) 173 ITR 100 and another that of the Andhra Pradesh High Court in CIT . Sri Krishna Bottlers (Pvt.) Ltd. (1989) 175 ITR 154. In both the decisions a similar question has been raised and both the Courts held that the bottles constitute plant within the meaning of section 43(3) of the Act and as such the assessee was entitled to depreciation at 100 per cent. Reference to the Delhi High Court decision, CIT v. National Air Products Ltd. (1980) 126 ITR 196 which finds mention in the order of the Commissioner of Income-tax (Appeals) also supports the aforesaid view Then Mr. Pawan Kumar also referred to a decision of the Supreme Court in CIT v. Taj Mahal Hotel (1971) 82 ITR 44, where the Supreme Court defined the plant.

We have gone through the aforesaid judgments and we see no reason to differ with the view taken by the Delhi, Rajasthan and Andhra Pradesh High Court. In this view of the matter, we answer the question in the affirmative against the Revenue and in favour of the assessee.

There will be no order as to costs.

M.B.A./1587/FCOrder accordingly.