Income-tax---

----Depreciation---Rate of depreciation---Construction business---Pieces used for centering costing less than Rs.5,000---Claim for depreciation at 100%-- No material to determine whether individual pieces would constitute plant-- Matter remanded---Indian Income Tax Act, 1961, S.32.

The assessee had claimed depreciation at 100 percent. under section 32 of the Income Tax Act, 1961, on centering material. The Assessing Officer, however, restricted the same to 33.33 percent. The Commissioner of Income-tax (Appeals), on the basis of the order of the Tribunal in another case, allowed the claim of the assessee. On appeal, the Tribunal found that the facts of this case were similar to the facts of the other case and upheld the order of the Commissioner of Income-tax (Appeals). On a reference it was contended by the Revenue that each centering material could not be taken individually but all the centering materials put together including the scaffolding constituted one plant and machinery and, therefore, the actual cost would exceed Rs.5,000:

Held, that the assessee had treated one piece of centering material as a plant and machinery which cost less than Rs.5,000 and had claimed 100 percent. depreciation. The Tribunal had merely referred to an earlier judgment and this was not the correct approach. There was no material to determine whether one or two pieces of centering material would constitute plant as a whole.

A. Sapre for the Commissioner.

B.L. Nema for the Assessee.

JUDGMENT

A.K. MATHUR, C.J.---This is an income-tax reference under section 256(1) of the Income Tax Act, 1961, at the instance of the Revenue and the following question of law has been referred by the Tribunal answer by this Court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was entitled to depreciation at 100 percent. on centering material under section 32 of the Income Tax Act, 1961?"

The brief facts giving rise to this reference are that while completing the assessment, the Assessing Officer noted that the assessee had claimed depreciation at 100 percent. on centering material. The Assessing Officer, however, restricted the same to 33.33 percent. The Commissioner of Income-tax (Appeals), on the basis of the order of the Income-tax Appellate Tribunal, Nagpur, in the case of Khare and Tarkunde, allowed the claim of the assessee. On appeal, the Tribunal found that the facts of this case are similar to the facts of the case in Khare and Terkunde---ITAT No.765/Nag of 1985, dated July 20, 1980, and upheld the order of the Commissioner of Income-tax (Appeals) and dismissed the Departmental appeal. The Departmental representative placed reliance on the statement of facts annexed to the reference application and contended that the view taken by the Commissioner of Income-tax (Appeals) is not correct, and the assessee is not entitled to 100 percent. depreciation on centering material. However, the Tribunal by referring to the decision in the case of Khare and Tarkunde, allowed 100 percent. depreciation. Hence, the Department approached the Tribunal to refer the aforesaid question of law before this Court and, accordingly, the Tribunal has referred the said question of law to this Court.

We have heard learned counsel and perused the record. Shri Sapre, learned counsel for the Revenue, submitted that the centering material is of course a part of plant and machinery but none the less it has to be taken as a whole and not one piece-meal. Learned counsel submitted that in order to work out the actual cost of any plant or machinery, each centering material cannot be taken individually but all the centering materials put together including the scaffolding constitute one plant and machinery and, therefore, the actual cost will exceed more than Rs.5,000. The assessee has claimed the same by treating one piece of centering material as a plant and machinery which costs less than Rs.5,000 and had claimed full depreciation. This, according to learned counsel for the Revenue, is not correct as by piecing all the plant and machinery together, they make one plant used for construction of a building. There is no direct evidence before us whether each individual centering material can be sufficient for construction of a building or not. As commonly understood, various centering materials, when pieced together, constitute one plant for construction of the building. One small plate or a few scaffoldings cannot be said to be sufficient for centering purposes.

Since the Tribunal has only referred to an earlier judgment given in the case of Khare and Tarkunde and has concluded that 100 percent. deduction is permissible, we are of the opinion that this was not the correct approach. Since we do not have sufficient material before us in order to examine the question whether one or two plates of centering material would constitute a plant as a whole or not we leave this question open to the Tribunal to take necessary evidence and determine the question first whether all the centering material put together will be used as a plant for centering purposes or individual pieces of centering material should be treated as sufficient for purposes of a plant so as to enable the assessee to claim hundred percent. exemption because it costs below Rs.5,000. The essential facts are not before us.

We, therefore, direct the Tribunal to examine the aforesaid factual aspect aid determine the question whether each plate of the centering material can constitute a plant or not to record its finding and decide the matter afresh answered.

M.B.A./4043/FCCase remanded.