1997 (2) TMI 47 - HC - Income Tax

Summary

Issues:
1. Depreciation on roads laid inside the factory premises.
2. Entitlement to extra shift allowance on the arc furnace and power travel electric lift used in the factory.

Analysis:
1. The court addressed the issue of depreciation on roads within the factory premises. The Appellate Tribunal referred to the Supreme Court decision in CIT v. Gwalior Rayon Silk Manufacturing Co. Ltd. [1992] 196 ITR 149, stating that the assessee was entitled to depreciation on such roads. The court upheld the Tribunal's decision based on the precedent, ruling in favor of the assessee for depreciation on factory roads.

2. Regarding the claim for extra shift allowance on the arc furnace and power travel electric lift, the Income-tax Officer initially rejected the claim, arguing that these items should be considered electric machinery, thus disallowing the extra-shift allowance. However, the Appellate Tribunal disagreed, determining that the arc furnace did not qualify as electrical machinery. The court referenced CIT v. M. S. Sahadevan [1980] 123 ITR 820 to define electrical machinery as having an in-built electric motor. Applying this definition, the court agreed with the Tribunal's decision on the arc furnace. However, the court found the Tribunal's reasoning on the power travel electric lift flawed. The Tribunal's consideration of the lift's mobility as a factor in determining it as electrical machinery was deemed incorrect. The court directed the Tribunal to reassess the lift's classification based on the criteria established in previous case law. Consequently, the court upheld the allowance for the arc furnace but instructed a reevaluation of the power travel electric lift's eligibility for extra-shift allowance.

In conclusion, the court affirmed the entitlement to extra-shift allowance on the arc furnace but remanded the decision on the power travel electric lift for further examination by the Appellate Tribunal in accordance with the legal principles outlined in previous judgments.