TMI Blog2002 (2) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1987 is arising out of two separate reference applications, it is ordered to be split up in Income-tax References Nos. 102 and 102A of 1987. At the instance of the Revenue, the Income-tax Appellate Tribunal had referred the following questions for the opinion of this court: "1. Whether the Tribunal is right in law and on facts in upholding the claim of the assessee for investment allowance on compound walls and fencing? 2. Whether the expenditure of Rs.1,84,197 being guest house expenses is not disallowable under section 37(4) of the Income-tax Act, 1961? 3. Whether the assessee is entitled to the allowance of expenditure of Rs.24,375 in view of the decision of the Gujarat High Court in the case of CIT v. Patel Bros. and Co. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's own case, i.e., CIT v. Gujarat State Fertilizer Co. Ltd. [1996] 219 ITR 550, wherein it is held that buildings have been separately classified as an asset for the purpose of depreciation under section 32 of the Act whereas buildings as such have not been included for considering the claim for development rebate under section 33 unless the building itself can be said to be a plant. It is only the machinery or a plant that will qualify for the claim under section 33 for development rebate. A building ordinarily cannot be considered to be a plant. Roads laid within the factory are an integral part of the factory building. Culverts are parts of roads. An assessee would not be entitled to development rebate on roads, culverts and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction on account of guest house expenses. At the time of hearing of this reference, our attention was drawn to the earlier decision of this court in the assessee's own case in Income-tax Reference No. 905/Ahd of 1985 wherein this court has upheld the view taken by the Tribunal, following the decision in CIT v. Gaekwar Mills Ltd. [1992] 193 ITR 734, wherein it is held that having regard to the facts and circumstances of the case, the accommodation in question maintained by the assessee was a residential accommodation in the nature of a guest house, within the meaning of clause (i) of section 37(4). However, since the said expenditure had not been incurred for the maintenance of residential accommodation in the nature of guest house, no pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the above referred case. The apex court has held in the said decision that the expenditure incurred by the assessee in providing ordinary meals to outstation customers according to established business practice, was a permissible deduction in respect of sub-section (2A) of section 37, in the computation of total income for the purpose of pay ment of tax under the Act during the relevant period prior to April 1, 1976. Following this decision, we hold that the assessee is entitled to the allowance of expenditure of Rs.24,375 in view of the decision of this court in the case of Patel Brothers and Co. Ltd. [1977] 106 ITR 424, as affirmed by the Supreme Court in CIT v, Patel Brothers and Co. Ltd. [1995] 215 ITR 165, and that the said expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Officer, but the same was allowed in appeal by the Commissioner of Income-tax (Appeals). The Tribunal allowed the said claim of the assessee following its decision in the assessee's own case for the assessment years 1968-69 and 1969-70. At the time of hearing of this reference, it was submitted before us that as far as the assessee's claim for allowance of development rebate on effluent system is concerned, the issue is squarely covered by the decision of this court in the assessee's own case reported in CIT v. Gujarat State Fertilizer Co. Ltd. [1996] 219 ITR 550, wherein it was held that an effluent discharge system for discharge of effluents which have come into existence as a result of operation of the plant must be deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above terms meaning thereby the assessee is entitled to development rebate on effluent system as well as instruments. However, the assessee is not entitled to development rebate on telephone instruments. As far as question No. 6 is concerned, it is observed by the Tribunal in the statement of case that the assessee has claimed depreciation on various items as set out in question No. 6. The said claim of the assessee was rejected by the Income-tax Officer, which was allowed by the Tribunal following its decision in the assessee's own case for the assessment years 1977-78 and 1979-80. It is submitted that the decision of the Tribunal for the assessment years 1977-78 and 1979-80 rests there only and it was not taken further in any refer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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