TMI Blog1998 (8) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the salary of the chief executive of the assessee-company as perquisites for the purpose of disallowance under section 40A(5) of the Income-tax Act. A similar question was considered by this court in the assessee's own case for a different assessment year in T. C. Nos. 526 and 527 of 1987 (First Leasing Co. of India Ltd. v. CIT (No. 1) [2000] 244 ITR 234) and the question was answered against the assessee and in favour of the Revenue. The Supreme Court in the case of CIT v. Mafatlal Gangabhai and Co. (P.) Lid. [1996] 219 ITR 644, held that the cash payments made by an employer to the employee do not amount to perquisites. We answer the first question referred to us against the assessee and in favour of the Revenue (?). The second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te "plant" on which normal depreciation is allowable but that benefit of the proviso to section 32(1)(ii) cannot be extended to bottles as bottles are normally used by the manufacturers or lessors in bulk-and not individually. The only question is as to whether individual bottles can be regarded as plant" for the purpose of the first proviso to section 32(1)(ii) of the Act. The proviso reads as under : "Provided that where the actual cost of any machinery or plant does not exceed seven hundred and fifty rupees, the actual cost thereof shall be allowed as a deduction in respect of the previous year in which such machinery or plant is first put to use by the assessee for the purposes of his business or profession." The words used in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidual units as a collective exercise and limit the benefit of depreciation only to the value of the collection of the units in bulk. The Revenue's case is not that bottles are not plant or that they do not have a degree of durability or that they are perishable in nature or that they are consumables. That they are capable of being re-cycled and being used as bottles if due care is shown by all those who handle the bottles and that they are capable of being used over a period of time which can run into years is not disputed. By the use of such bottles the assessee thus derived a benefit of enduring nature. The Revenue has rightly accepted the Tribunal's finding that bottles do constitute plant. Bottles by their very nature are required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the individual unit and once it is found that the value of the individual unit which could be regarded as a plant, is below Rs. 750 it would qualify for 100 per cent. depreciation as provided in the proviso. The task of determining the circumstances in which the proviso is applicable is thus quite simple. One has to first identify the plant or machinery. If the asset claimed by the assessee as plant and machinery is found to be such, the only question to be answered thereafter is as to the value thereof. If the value is below Rs. 750 the proviso will apply. There is no need or occasion for raising a further question as to how many numbers of such units were bought by the assessee at a time or in the course of the year or ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the requirements of the types per day should be taken as the basis for determining the cost of types, while the Revenue contended that it should be the expenditure incurred on types for the whole year. The court after holding that the provisions of the Act have to be interpreted in a manner which will apply uniformly to all the assessees and the extent of depreciation allowable should not depend upon the periodicity of the purchase made by the particular assessee, held that neither the cost of a day's requirement nor the, cost of a year's requirement of types is to be taken as the basis for computing the cost of types for the purpose of calculating depreciation. The court did not decide as to the manner in which the cost of the types used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the value of each bottle was less than Rs. 750. It was also held by that court that collective purchase did not render a claim for depreciation in respect of individual items thereof not allowable. The Delhi High Court in the case of CIT v. Prem Nath Monga Bottlers (P.) Ltd. [1997] 226 ITR 864, has also taken a similar view that individual units are to be allowed depreciation under the proviso to section 32(1)(ii) of the Act and that bottles would qualify for such depreciation. The Calcutta High Court in the case of CIT v. Tea Estates India Ltd. [1994] 207 ITR 311, held that electrical installations installed in labour quarters are to be allowed depreciation under the proviso to section 32(1)(ii) of the Income-tax Act, as each labour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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