TMI Blog2015 (2) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... roviding support to the reinforced concrete and cement or the poles and bars that are used at the time of formation. We choose to fall in line not only with the judgment of this Court in Sri Krishna Bottlers Pvt. Ltd.s case (1988 (4)TMI 10 - ANDHRA PRADESH High Court), which in turn has drawn its conclusion based upon the judgment of the Supreme Court in Commissioner of Income Tax vs. Taj Mahal Hotel [1971 (8) TMI 2 - SUPREME Court], but also the judgments rendered by the other High Courts to allow 100% depreciation - Decided in favour of assessee. - I.T.T.A.No.239 of 2003 - - - Dated:- 27-11-2014 - SRI L.NARASIMHA REDDY AND SRI CHALLA KODANDA RAM, JJ. For the Appellant : Sri J.V.Prasad For the Respondent: Sri Pushyam Kiran JUDGMENT: (Per LNR,J) The respondent herein undertakes several business activities. One of it is to acquire the shuttering material, which is used in the process of construction of buildings and to lease the same to the intending users. In its returns of income submitted for the assessment year 1995-96, it claimed depreciation of RS.28,85,450/- being the cost of the shuttering material. Its plea was that the cost of each item of the shut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f by this Court in Raghavendra Constructionss case (1 supra), a crucial paragraph in the judgment of Sri Krishna Bottlers Pvt. Ltd.s case (2 supra) was treated as though it was not in existence at all. He submits that in a way, the judgment in Raghavendra Constructions case (1 supra) deserves to be treated as rendered in sub silentio of an otherwise binding precedent. Learned counsel has drawn our attention to the judgments of the other High Courts on the same subject relating to the same material, as well as the comment made in relation to the judgment of this Court in Raghavendra Constructionss case (1 supra) in the treatise Income Tax by Kanga Palkhivala. The only question that arose for consideration in the appeals before the Commissioner as well as the Tribunal was as to whether the shuttering material purchased by the respondent, in the assessment year 1995-96 qualified for 100% depreciation. Section 32 of the Act is relevant in this context. The provision as it stood then, reads: 32. Depreciation- (1) In respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial of any particular area cannot be treated as a unit. It is not only supplied, but also is used, in small units. In the context of availing the benefit under Section 32(1)(ii) of the Act, identification of a unit of plant becomes essential. Though the Act and the precedents on the subject are silent about this, the safest way is to identify the irreducible minimum of the plant or machinery, which in turn can be put to independent use. The mere fact that the number of such units can be clubbed together to achieve the result in a greater magnitude by itself does not result in merger into the larger one or loss of their identity. In this behalf, individual plates of sizes of about 3ft. x 3ft. for providing support for slab or 10ft x 3ft. or 2ft. for providing support to the beams or pillars can safely be treated as units. If the slab of 1000 ft. is to be laid, the builder or the meson must put to use, the required number of steel plates or wooden planks of the typical size to use. Nowhere we come across the instances of the shuttering material, of the size of the room or the building either being ordered or manufactured much less being put to use. These and other aspects were tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . One of the questions that was dealt with in Sri Krishna Bottlers Pvt. Ltd.s case (2 supra) was whether each bottle that is used for serving a soft drink and the shells, in which they are arranged qualify for 100% depreciation under Section 32 of the Act. The matter was discussed in detail, obviously because the subject was almost untouched by that time. The judgment of the Supreme Court in Commissioner of Income Tax vs. Taj Mahal Hotel and various judgments of the Courts in India and Foreign Countries were discussed at length to draw support for the conclusions. The purport of almost each and every judgment that was cited before their lordships was taken note of. As regards bottles and shells, their lordships observed The bottles containing the soft drink cannot be stock- in-trade inasmuch as the bottle by itself is not the subject of sale. The customer or the retailer returns back the bottle to the assessee after the soft drink is consumed. Likewise, the shells which are sent to the customer or dealer also come back with the empty bottles and they cannot also be stock-in-trade. What is the function these bottles and shells perform in the assessee's trade ? Are they essent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bottles and shells used by soft drinks bottling industry is plant. The Division Bench nowhere observed that each bottle or each shell would also be a plant for the purpose of section 32(1)(ii). It was proceeded as though in Sri Krishna Bottlers Pvt. Ltd.s case (2 supra), each bottle and shell was not treated as unit qualifying for depreciation under Section 32(1)(ii) of the Act. This does not appear to be correct. The underlined portion of the Judgment in Sri Krishna Bottlers Pvt. Ltd.s case (2 supra) makes this clear. Two difficult questions that crop up in this behalf are (a) choosing an appropriate precedent and (b) identification of the ratio laid therein. In fact, both happen to be different facets of the doctrine of stare descis. The binding nature of a judgment rendered by a superior Forum in a legal system, can hardly be the subject matter of discussion. Slight difficulty arises mostly in relation to the precedents coming from the Courts of co-equal jurisdiction. The precedent rendered by a Court is followed by another Court of same status or jurisdiction, almost, as a matter of course. However, law does provide for making deviation from a precedent of that nature, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub silentio as under: A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio. In Shan Zahoor and others Vs.Vijayawada Municipal Corporation , one of us (LNR,J) discussed some facets of concept of precedent as under: A judgment of a Court operates as a precedent only for what it decides, known as ratio decidendi and not for its general or casual observations, called obiter dicta. However, discerning or culling out the ratio decidendi of judgment is by no means a simple or easy task. Many a time, it wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture the first time it is expressed by a Court. It will often have been stated by the Court in a tentative and groping fashion, and its true import and scope will not be capable of being ascertained until other Courts have had a chance to correct the inadequacies of the first formulation and to graft exceptions, qualifications, and caveats upon the principle. In this way the ratio decidendi of a case often develops its true and full meaning slowly and haltingly, and it may take a whole series of decisions involving variations of the situation presented in the first case until a full-blown rule of law, surrounded perhaps by a cluster of exceptions, replaces the tentatively and inadequately formulated generalization found in the initial decision. In short, a whole course of decisions will gradually mark out the outer limits of a legal principle left indeterminate by the first decision attempting to give form to it. The difficulty in distinguishing ratio decidendi from obiter dicta is explained by C.K. Allen, in his celebrated work Law in the Making , in the following terms: One of the greatest difficulties in its conception is the distinction which is constantl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exerted only persuasive authority. In his treatise on Jurisprudence, R.W.M. Dias expressed the following view: More serious is the implication of saying that two decisions are in conflict. Logically the exception contradicts the rule. For, if the Court of Appeal propounds a rule in one case and a different rule in another, the later of the two must either have been decided in ignorance of the earlier, in which event it falls under the third exception and is accordingly invalid; or it must have violated the rule that the Court is bound, in which event also it is invalid. To assert that the Court may choose between them and perhaps prefer the later case is in effect to escape from the rule itself by according validity to the very case which has violated it. The discussion can be further prolonged on academic lines. The effort is only to drive home the point that if a Court is placed with two precedents rendered by itself, one in conflict with the other, it has every right to choose as between the two and by doing so, it does not do any violence to the other. At the most, it may be an occasion for the superior Court to resolve the rule on ostensible conflict. Applying these p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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