(a) Income-tax-

----Exemption---Depreciation---Buildings---"Work" and "workshop"-- Meanings---" Work" means any physical activity that means to obtain some end, the goal or the purpose and does not necessarily mean only a place of manufacturing process---" Workshop" as such is a place where some work is being carried on, be that for the purpose of manufacturing or not-- Restrictive meanings are to be allowed to the definition of "Factory or shop" in relation to an exemption clause, in respect of a facility provided by the Legislature in term of depreciation---Definition of the words "work" and "workshop" from such an angle would include the buildings which are utilized for the purposes which are not strictly manufacturing but are ancillary to the manufacturing process.

(b) Income Tax Ordinance (XXXI of 1979)--

----Third Sched., R.2(1)---Depreciation allowance---Factory and workshop-- Cold storage---Cold storage was covered under the definition of word "workshop" and it was entitled to depreciation @ 10%---Cold storage was an industrial. undertaking and was fully covered under the definition of "workshop" as it operated through a huge plant that manufactures a type of gas which maintains the freshness of the items placed therein and its natural shape for a longer duration than it could normally retain---Manufacturing of compressed gas for cooling the atmosphere within the area of the cold storage, was a "manufacturing process" cold storage was covered under the definition of the word "workshop" and was entitled to depreciation @10% .

(c) Words and phrases---

----"Work" and "workshop" ---Meanings.

Webster's Comprehensive Dictionary, International Edn., Vol. Two by J.C. Ferguson ref.

Muhammad Ahmad, D.R. for Appellant.

Muhammad Nazeer, I.T.P. for Respondent.

Date of hearing: 13th April, 2001.

ORDER

In this appeal petitioner the department assails reduction in rate of storage charges and conversion of depreciation from 5 % to 10% .

D.R. says, that the I.T.O. had adopted per bag rate at Rs.105 against declared at Rs.97.80 which was in keeping view the fact that in a parallel case bearing NTN 23-2-0455852 rate per bag was adopted at Rs.100 in assessment year 1997-98 as well as in 1998-99. The argument of learned A.R. before First Appellate Authority as well as before me is that if in a parallel case the rate was Rs.100 there was no justification of application of Rs.105. Moreover, the A.A.C. relied upon, certain other cases wherein the rate was adopted at Rs.102. The A.R. remarked that even Rs.102 for the year is excessive, however, he is not in appeal hence the order of the First Appellate Authority needs confirmation, similarly, for the assessment year 1998-99 the reduction of rate to Rs.115 again fixed by the I.T.O. at Rs.125 has also been contested by the department but in my opinion the history does not support such an excessive appreciation in one year. The rate reduced to Rs.115 is quite justified. In the absence of any parallel case to prove the reduction to be unreasonable. I hereby confirm the same for both the years.

The second issue which in fact is the core point is with regard to allowance of depreciation. Controversy has emerged for the reason that in the Third Schedule the manufacture while fixing the rates has not specifically mentioned the building of cold storage while prescribing this rates of depreciation. The nomenclature given therein are as follows:---

2. The above Schedule has mentioned classes for general guidance. It obviously does not mean that it ignores or disentitles any type of building. The impression comes from the Item No.1 wherein the building not otherwise specified have been covered. The case of the assessee, however, is that the cold storage is a properly specified building and it is covered within the definition of "Factory and workshop". In this regard the first argument is that a cold storage plot is treated as an industrial land and its connection a!l9wed by the WAPDA is also approved as an industrial connection. Further, the Director Industries under Factories and Labour Act has also confirmed its status as an industry through letter of permission. The other relating facts in respect of a cold storage building are that the machinery involved and installed is a complex mechanical unit. It comprises of multifarious control systems and other installations. It involves a very comprehensive installation of pipeline through the building and other ancillaries which normally are in tons of weight. Further, the functioning of the cold storage unit ends in more erosion of the building on account of its utilization than any other factory or workshop. A workshop is defined to be a place where work is being done. The same, therefore, includes all kinds of works including manufacturing, repairing etc. For the purposes of depreciation it has still a wider scope. My opinion funds support from following definitions:---

Workshop (1) A building or a room where any work is carried.

(2) A seminar or single session for training, discussion, etc.

(Webster's Comprehensive Dictionary, International Edition, Volume Two by J.C. Ferguson Publishing Co., Chicago)

And, 'work' has been defined as follows in the same dictionary:---

Work:

Continued exertion or activity directed to some purpose or end; especially normal labour, hence opportunity for labour, occupation.

The other definitions are as follows:-----

2. That upon which labour is expended on undertaking; task:

3. That which is produced by or as by labour, specifically, an engineering structure, fortification a design produced with a needle; also, a product of mental labour, as a book or open.

4. A manufacturing or other industrial establishment; usually in the plural.

From the above, it is clear that a 'work' means any physical activity that means to obtain some end, the goal or the purpose. It does not necessarily mean only a place of manufacturing process. The 'workshop' as such obviously is a place where some work is being carried on be that for the purpose of manufacturing or not. Since the issue before me is in relation to an exemption clause, in respect of a facility provided by the Legislature in terms of depreciation; restrictive meanings are to be allowed to the definition of "Factory or shop". However, even from this angle the definition of the words 'work' and 'workshop' would include the buildings which are utilized for the purposes which are not strictly manufacturing but are ancillary to the manufacturing process. A cold storage is undoubted an industrial undertaking and is fully covered under the definition of "workshop'". As already mentioned it operates through a huge plant that manufactures a type of gas which maintains the freshness of the items placed therein and its natural shape for a longer duration than it can normally retain. Manufacturing of compressed gas for cooling the atmosphere within the area of the cold storage, is undoubted a manufacturing process. So, even if a respective view is required the cold storage shall be covered into it. I, therefore, hold without any hesitation that a cold storage is very well-covered under the definition of the word 'workshop' hence is entitled to depreciation @ 10%.

The order of the CIT (A), therefore, is fully justified and the same is hereby maintained.

C:M.A./M.A.K./126/Tax(Trib.) Order accordingly.