COMMISSIONER OF INCOME-TAX VS ROADMASTER INDUSTRIES OF INDIA (P.) LTD
1999 P T D 2791
[229 I T R 68]
[Punjab and Haryana High Court (lndia)]
Before Ashok Bhan and T. H. B. Chalapathi, JJ
COMMISSIONER OF INCOME-TAX
Versus
ROADMASTER INDUSTRIES OF INDIA (P.) LTD
I.T.C. No.84 of 1995, decided on 03/05/1996.
(a) Income-tax---
----Reference---Depreciation---Tribunal finding that tubewell is "plant" as it supplied water to factory and formed part of manufacturing process-- Finding of fact---No referable question arises---Indian Income Tax Act, 1961, S.256(2).
(b) Income-tax---
----Reference---Precedent---Tribunal justified in declining to refer issue covered by an earlier judgment of jurisdictional High Court---Indian Income Tax Act, 1961, S.256(2).
(c) Income-tax---
----Reference---Issue not arising out of order of Tribunal---Not referable-- Indian Income Tax Act, 1961, S.256(2).
Where the Tribunal noted that the amendment to the Income Tax Rules, 1962, prescribing 5 percent depreciation for tubewells brought about with effect from April 2, 1983, would not cover the year under consideration, namely, the assessment year 1978-79, and that the tubewell supplied water to the factory and formed part of the plant for manufacturing process and was eligible for depreciation at 10 percent.
Held, that the reference was rightly declined by the Tribunal
Held also, (i) that in respect of sea freight and marine insurance, the Tribunal rightly declined reference as it followed the earlier judgment of the jurisdictional High Court in CIT v. Roadmaster Industries of India (Pvt.) Ltd. (1993) 102 ITR 968 (P & H).
CIT v. Roadmaster Industries of India (Pvt.) Ltd. (1993) 202 ITR 968 (P & H) fol.
(ii) that as the parties conceded that the issue of weighted deduction on bank interest and forwarding charges to the bank did not arise out of the order of the Tribunal no referable question of law arose.
R.P. Sawhney, Senior Advocate and Sanjay Goel for Petitioner.
A.K. Mittal for Respondent.
JUDGMENT
This petition has been filed under section 256(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), for directing the Income-tax Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as "the Tribunal"), to refer the following questions of law along with the statement of the case for the opinion of this Court:
(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 tubewell of the assessee forms a part of its plant entitling it for depreciation at 10 per cent, against the specific rate provided under the head 'Building' in Appendix-I, Part I, read with Rule 5 of the Income-tax Rules for which the rate of five percent has been prescribed?
(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 was entitled to weighted deduction under section 35-B on expenses on sea freight of Rs.12,65,266 and insurance charges of Rs.1,46,109 incurred by the assessee, whether in India or outside?
(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 issue of allowance of weighted deduction under section 35-B on bank interest of Rs.58,319 and forwarding charges to bank of Rs.15,440 does not arise out of the order of the Tribunal?"
During the course of the assessment proceedings for the assessment year 1978-79, the following issues came up for the consideration of the
Assessing Officer:
"(1) The assessee claimed depreciation on tubewell at 10 per cent. The Assessing Officer allowed depreciation at five percent treating the tubewell as part of the building.
(2) Weighted deduction under section, 35-B claimed on expenses incurred on sea freight amounting to Rs.12,65,266 freight and other charges from Rajpura to Port amounting to Rs.6,89,879, insurance charges amounting to Rs,1,46,109, bank interest of Rs.58,319 and forwarding charges to bank of Rs.15,445 was not allowed by the Assessing Officer."
Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) who allowed depreciation on the tubewell at the rate of 10 percent holding it to be a plant and machinery of the assessee; further the appellate authority allowed weighted deduction under section 35-B on the expenses incurred on sea freight of Rs.12,65,266, freight and other charges from Rajpura to Port of Rs.6,89,879, insurance charges of Rs.1,46,109, bank interest of Rs.58,319 and forwarding charges to bank of Rs.15,445.
Being not satisfied with the order of the Commissioner of Income -tax (Appeals), the Revenue filed an appeal before the Tribunal. The Tribunal upheld the order of the Commissioner of Income-tax (Appeals) allowing deduction at the rate of 10 percent. holding it to be a plant and machinery of the assessee; further the Tribunal allowed weighted deduction on sea freight of Rs.12,65,266 and insurance charges of Rs.1,46,109. However, it rejected the claim of the assessee for weighted deduction under section 35-B on freight and other charges from Rajpura to Port of Rs.6,89,879, bank interest of Rs.58,319 and forwarding charges to bank of Rs.15,445. The Revenue filed an application under section 256(1) of the Act claiming the questions of law reproduced above. The same has been declined.
Counsel for the parties have been heard.
The first question is regarding the depreciation rate on tubewells. The assessee claimed depreciation on the tubewell at the rate of 10 percent against which the Assessing Officer allowed the same at the rate of five per cent: by treating the tubewell as part of the building. The case of the Revenue was that a specific rate of five percent has been prescribed for tubewells in Appendix-I, Part 1, read with Rule 5 of the Income-tax rules. The Tribunal noticed that the change in the rules was brought about by the Income-tax (Fourth Amendment) Rules, 1983, with effect from April 2, 1983, and was effective from the assessment year 1984-85. The assessment year in question is 1978-79 and, therefore, the amendment in the rules brought about by the Income-tax (Fourth Amendment) Rules, 1983, would not cover the year under consideration, namely, the assessment year 1978-79. The Tribunal further recorded a finding of fact that the tubewell was supplying water to the factory and was a part of the manufacturing process of the assessee-company. In view of the findings recorded by the Tribunal, question No. 1 has been rightly declined.
Question No.2 has been declined by the Tribunal relying upon a judgment of this Court in the assessee's own case reported as CIT v. Roadmaster Industries of India (Private) Ltd. (1993) 202 ITR 968. Since the issue is covered by the judgment of the jurisdictional High Court in the earlier years in the case of the assessee, the Tribunal has rightly declined to refer the same for the opinion of this Court.
Counsel for the parties conceded that question No.3 does not arise out of the order of the Tribunal. No referable question of law arises. Dismissed. No costs.
M.B.A./3051/FCOrder accordingly.