COMMISSIONER OF INCOME-TAX VS HARNARAYAN LOHIA & SONS
1999 P T D 154
[225 I T R 82]
[Calcutta High Court (India)]
Before Visheshwar Nath Khare, C.J. and Barin Ghosh, J
COMMISSIONER OF INCOME-TAX
Versus
HARNARAYAN LOHIA & SONS
Income-tax Reference No. 106 of 1995, decided on 14/01/1997.
Income-tax---
----Depreciation---Plant and machinery---Renewable energy devices---Cold storage plant operated by solar energy---Certificate furnished by chartered engineer---Tribunal finding plant entitled to depreciation at 30 per cent-- Justified---Income Tax Rules, 1962, Appx. I, Part I, Item, III-D(10-A)(vii).
The assessee ran a cold storage plant and for the assessment years 1985-86 and 1986-87 claimed depreciation on the cold storage plant at 30 per cent. on the ground that it was solar energy operated and fell within the category of renewable energy devices under Item III-(10-A) of Part I of Appendix I to the Income Tax Rules, 1962. The Appellate Tribunal, on the basis of a. certificate furnished by a chartered engineer, setting out in detail the process employed, found that the assessee's cold storage plant was run by renewable energy devices and held that the assessee was entitled to
depreciation at 30 per cent. On a reference:
Held, that the finding of the Tribunal was based on materials on ' record and was not arbitrary nor perverse.
JUDGMENT.
V.N. KHARE, C.J.---At the instance of the Commissioner of Income-tax, the Income-tax Tribunal has referred the following question of law for answer to this Court under section 256(1) of the Income Tax Act, 1961.
"Whether, on the facts and circumstances of the case, the Tribunal was justified in law in allowing the assessee's appeal against the order of the Commissioner of Income-tax West Bengal VIII, Calcutta, passed under section 263, upholding the order of the Commissioner of Income-tax (Appeals) who held that the cold storage of the assessee falls within the category of 'renewable energy devices being solar energy operated cold storage within the meaning of Appendix I, item No. III-D---Machinery and plant, No.(10-A)(vii) of Part I of the Income Tax Rules, 1962 ?"
The facts which give rise to the aforesaid question of law are that the assessee is a firm which runs a cold storage. The relevant assessment years involved are 1985-86 and 1986-87. For these two assessment years, the Assessing Officer allowed depreciation on the cold storage plant at the rate of 30 per cent which was applicable to the plant and machinery or renewable energy device being solar refrigeration cold storage air-conditioning system.
However, the Commissioner of Income-tax set aside the aforesaid assessment orders under section 263 of the Income Tax Act, and directed the Assessing Officer to make a fresh order of assessment for the relevant assessment years. The Commissioner of Income-tax was of the view that the depreciation allowable to the assessee was at the rate of 15 per cent. and not at the rate of 30 per cent.
Being aggrieved, the assessee preferred an appeal to the Tribunal.
The Tribunal agreed with the view taken by the Assessing Officer and thus set aside the order of the Commissioner of Income-tax. Appendix-I of the Income-tax Rules, 1962, provides allowable deduction. Under heading "Plant and Machinery" at item No. (10-A) depreciation of 30 per cent. is allowable if it is a renewable energy device being a cold storage. Before the Tribunal, a chartered engineer has given a certificate in favour of the assessee which is as follows:
I hereby certify that cold storage are run by renewable energy devices. In cold storage electrical energy is used to evaporate and liquify refrigerants like ammonia. The refrigerant liquid ammonia is stored in a vessel called receiver and is passed through expansion nozzle where it suddenly expands becomes gas and very cool. Then it passes through coils in 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 desired level for preservation of stored food stuff. From 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 coil (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 Hamarayan Lohia & Sons, Kaybee Corporation and Century Cold Storage Prop. Century Laminating Company Limited, having office at 5, Alexandra Court, 60/1, Chowringhee Road Calcutta 700 020.
Sd. K.N. Kumar, Chartered Engineer F. 2124
Registered Valuer CAT VII 116."
Relying upon this certificate, the Tribunal found that the assessee's cold storage is run by a renewable energy device and as such was entitled to depreciation at the rate of 30 per cent. The finding of the Tribunal is based on material on record and it cannot be called arbitrary or perverse.
In view of the finding recorded by the Tribunal, we answer the question in the reference in affirmative, in favour of the claimant and against the Revenue.
Let our opinion be transmitted to the Tribunal forthwith.
There will be no order as to costs.
Barin Ghosh, J.---I agree.
M.B.A./1657/FCReference answered.