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The Assistant Commissioner of Income Tax & COMMISSIONER OF INCOME-TAX Versus Victory Aqua Farm Ltd.

2015 (9) TMI 758 - SUPREME COURT

Depreciation claim - whether 'natural pond' which as per the assessee is specially designed for rearing prawns would be treated as 'plant' within Section 32? - Held that:- An attempt was made by the learned counsel for the Revenue to the effect that the pond in question was natural and not constructed/specially designed by the assessee. We do not find it be so. In the judgment of the High Court [2004 (10) TMI 84 - KERALA High Court], which is decided in favour of the assessee, the High Court has .....

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SUPREME Court]

We find that the judgment dated 14.10.2004 rightly rests this case on 'functional test' and since the ponds were specially designed for rearing/breeding of the prawns, they have to be treated as tools of the business of the assessee and the depreciation was admissible on these ponds. - Decided in favour of the assessee - Civil Appeal No. 4430/2006, C.A. No. 4429/2006 & C.A. No. 5099-5100/2009 - Dated:- 4-9-2015 - A. K. Sikri And Rohinton Fali Nariman, JJ. For the Appell .....

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s 'the Act') for the purposes of allowing depreciation thereon. We may mention at the outset that one Division Bench of the High Court of Kerala in the case of the same assessee had on earlier occasion decided the aforesaid question in the negative holding that it is not a 'plant'. However, another Division Bench by the impugned judgment dated 14.10.2014, even after noticing the earlier judgment, has not agreed with the earlier opinion and has rendered contrary decision. We are, .....

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the High Court to be considered by a larger Bench. Facts in brief are that the assessee is a company doing business of 'Aqua Culture'. It grows prawns in specially designed ponds. In the income tax returns filed by the assessee, the assessee had claimed depreciation in respect of these ponds by raising a plea that these prawn ponds are tools to the business of the assessee and, therefore, they constitute 'plant' within the meaning of Section 32 of the Act. The Assessing Officer .....

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me Tax, Karnataka vs. Karnataka Power Corporation [2002(9) SCC 571] clinches the issue. Therein the Court has taken into consideration the earlier judgments on which some reliance was placed by the learned counsel for the Revenue and are suitably dealt with. The relevant portion of the said judgment reads as under: "5. It was the case of the assessee that it was entitled to investment allowance as applicable to a plant in respect of its power generating station building. In a note filed bef .....

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rocess of generation continued until the electricity was led to the transmission tower. The water that was used for rotation of the turbines had to be removed and this was done through the Tail Race Channel. For stepping up the electricity, transformers were used in the outdoor yard. The conduction of the electricity was through conductors held in ducts, called the Cable Duct System, which were specifically designed for the purpose. The case of the assessee, therefore, was that all these were pa .....

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hout such special construction. He, therefore, allowed investment, allowance on the generating station, building, as claimed. The Tribunal affirmed this finding, as, indeed did the High Court. 6. We, therefore, have before us a finding of fact recorded by the fact finding authority that the generating station building is an integral part of the assessee's generating system. 7. Our attention has been drawn by learned Counsel for the Revenue to the judgment of this Court in Commissioner of Inc .....

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used as a hotel or a cinema theatre could be given depreciation on the basis that it was a "plant" and it was in relation to that question that the court considered a host of authorities of this country and England and came to the conclusion that a building which was used as a hotel or cinema theatre could not be given depreciation on the basis that it was a plant. We must add that the Court said, "To differentiate a building for grant of additional depreciation by holding it to b .....

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