TMI Blog2001 (10) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 9,33,804 - 100% Fogers Rs. 56,169 - 100% Fans in farms Rs. 1,31,632 - 100% ...." ------------------------------------------------------------------------ The Commissioner considered the issue of the grant of hundred per cent depreciation on cages, mentioned above, used in the poultry farming, in the light of the decision of the Hon'ble Karnataka High Court in Pathange Poultry Farm v. CITv [1994] 210 ITR 668 and came to the conclusion that cages do not qualify for 100 per cent depreciation. It was contended before the CIT that each cage is an individual unit, though a series of cages are fabricated on a common base, and so they are entitled for 100 per cent depreciation. Before the Commissioner, as before the Assessing Officer, the contentions of the assessee were as under-- "i The function of each cage is to ensure that the movement of birds is restricted to conserve the energy of birds and increase their productivity; to avoid exposure of the birds to litter and droppings of other b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... five hundred seven and paise seventy only) for Famous Metal Works Sd/ (Proprietor)..." ------------------------------------------------------------------------ There are other similar bills relating to purchase of cages aggregating to Rs.9,33,803.00, which have been considered by the CIT. In the light of the above bills, the CIT concluded as under-- "5.3 Thus the assessee's argument that the cost of each cage is less than Rs.5,000 and therefore the entire cost is allowable as an expenditure under section 32(1)(ii) cannot be entertained The various decisions relied on by the assessee are not relevant and are distinguishable on facts. As held by Karnataka High Court in the case of Pathange Poultry Farms v. CIT 210 ITR 668 (Kar.), cages purchased for poultry farming are not entitled for 100 per cent depreciation, when these were not used as independent units, but were only utilised for fabrication of bigger compartments with common facilities of lighting, feeding, watering, etc. and this decision is applicable on all fours to the facts of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al cages or not. The fact that number of cages are fixed with wire mesh to each other in a row for the economy of space and to facilitate easy operations, should not prejudice the claim for 100 per cent depreciation. It is firstly made out that the decision of Hon'ble Karnataka High Court in the case of Pathange Poultry Farm is distinguishable on facts. It is made out that the Hon'ble Karnataka High Court in that case proceeded on the assumption that the cages were not used as independent units, but utilised by the assessee for fabrication into a bigger component to accommodate a number of birds. It is pleaded that in the case of assessee, each cage is capable of independent usage without any association or assistance of other cages. Apart from attempting to distinguish its case from the one considered by the Hon'ble Karnataka High Court, the learned counsel for the assessee cited a number of cases where analogous issue has been considered and decided in favour of the assessee. They are the following-- (a) CIT v. Sri Krishna Bottlers (P.) Ltd. [1989] 175 ITR 154 (AP) (b) CIT v. Prem Nath Monga Bottlers (P.) Ltd [1997] 226 ITR 864 (Delhi) (c) First Leasing Co. of India Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CIT v. M.M Khambatwala [1992] 198 ITR 144. In this case, the Hon'ble Gujarat High Court held that the powers under section 263 are not comparable with the powers of rectification of a mistake under section 154 of the Act, and so, even though powers under section 154 cannot be exercised when the issue is debatable, such restriction does not apply to the powers under section 263. It is also contended that when the assessment order is contrary to a direct decision of a High Court, though not of a jurisdictional High Court and there is no direct decision of any other High Court to the contrary, the CIT is within his rights in invoking the provisions of section 263, as there is no other way of safeguarding the interests of the Revenue. 6. In reply, the learned counsel for the assessee pleaded that the decision of the Gujarat High Court in the case of M.M. Khambatwala has to be regarded as erroneous in view of the subsequent decision of the Apex Court in the case of Malabar Industrial Co. Ltd. in which it has been clearly held that where two views are possible, the provisions of section 263 are precluded. 7. We are of the view that the assessee deserves to succeed. This is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent depreciation is allowable in terms of section 32(1)(ii) on fire-extinguishers numbering 24, each costing less than Rs.750. In the same decision, three inter-com telephones were also held to be eligible to be depreciated at the rate of 100 per cent, even though they are only sub-instruments. In the case of Patel Enterprises, the question that arose for consideration was grant of depreciation in terms of the proviso to section 32(1)(ii) on chairs installed in a cinema theatre. The chairs in the cinema theatre are fixed to the earth and they are also inter-connected by some other arrangement. It was held that each chair being a separate unit liable to be repaired, replaced or removed without affecting the adjoining chairs, the assessee is entitled for the benefit of cent-per-cent depreciation on chairs in terms of proviso to section 32(1)(ii). This case comes closest to the issue on hand before us in the present appeal. The cages involved in the case on hand, may also be connected and integrated for the facility of watering, etc. and even though they are so inter-connected, the contention of the assessee is that each cage is a separate unit and is meant to accommodate a specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds relating to any proceeding under the Act available at the time of examination by the Commissioner, constitute record, and so, the Commissioner, in the present case, was justified in relying on the decision of the Hon'ble Karnataka High Court in the case of Pathange Poultry Farm, though rendered subsequent to the completion of the assessment, for the purposes of initiating action under section 263. The question however is whether the said decision of the Hon'ble Karnataka High Court in that case shuts out the other view taken by the Assessing Officer in the matter. We are of the view that the view taken by the Assessing Officer in accepting the claim of the assessee for hundred per cent depreciation cannot be regarded as impossible or illegal in the light of the ratio of the decisions cited by the learned counsel for the assessee before us. It also deserves to be noticed that the decision of another High Court cannot be equated to that of the jurisdictional High Court in its binding effect. If we go by the view taken by the Commissioner, every time a decision of another High Court (not of jurisdictional High Court) on a particular issue goes contrary to the view taken by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the head 'Other sources'. The Apex Court upheld the action of the CIT, and while doing so observed that there was a finding of the Tribunal that the assessee stopped agricultural operations much earlier in November 1982; and that the receipt did not relate to any agricultural operation carried by the assessee. So, the decision of the Apex Court proceeded on certain factual findings given by the Tribunal. At the same time, the Apex Court laid down in unmistakable terms, the following legal propositions-- "...The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income-tax Officer has taken one of the courses permissible in law and it has resulted in loss of Revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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