TMI Blog1983 (6) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... s enhanced, respectively, by the sums of Rs. 10,41,016, Rs. 8,23,499 and Rs. 7,31,061 being the expenditure on land development, road$ and fencing as allocated by the Tribunal among these three fixed assets, for the assessment years 1969-70, 1970-71 and 1971-72 (R. A. Nos. 1747, 1748 and 1752 and R. A. Nos. 1751, 1750 land 1749) ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in directing granting of development rebate on the cost of plant and machinery as enhanced by the sum of Rs. 10,41,016 being the expenditure on land development, roads and fencing, allocated to this asset by the Tribunal (out of the total expenditure of Rs. 26,03,576) for the assessment year 1969-70 (R. A. No. 1751/(Bom) of 1976-77) ? " The facts leading up to the dispute are summarised by the Tribunal in its order under reference at page 11 as under : " The assessee, for the purpose of erection of its plant and buildings, had acquired leasehold rights from the Maharashtra Industrial Development Corporation, a large tract of land admeasuring about 360 acres near Kulshet village on Thane-Belapur Road. The site, before it could be fit for the erection of plant and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balance relating to factory area 11,89,184 6,75,331 Amounts transferred to buildings in factory area on the basis of area occupied : To buildings---depreciation rate 2 ½ per cent. 72,375 2,84,599 To buildings-depreciation rate 5 per cent. 1,18,563 1,24,233 To buildings-depreciation rate 10 per cent. 71,226 1,52,503 ------------------ ----------------- 2,62,164 5,61,335 ------------------ ----------------- Amounts transferred to plant and machinery on the basis of area occupied : To plant and machinery-depreciation rate 10 per cent. 3,26,330 40,129 To plant and machinery-depreciation rate 15 per cent. 6,00,690 73,867 -------------------- ------------------- 9,27,020 1,13,996 -------------------- -------------------- Total as above 11,89,184 6,75,331 -------------------- --------------------- Rs. Land development 3,48,438 Roads 8,40,746 ------------------ 11,89,184 ------------------ Land Development 95,051 Roads 5,01,583 ------------------- 5,96,634 ------------------- On the aforesaid facts, the assessee claimed depreciation on the capitalisation of the expenditure incurred in the development of the land for installing its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing should be treated as expenditure incurred on the factory building. The Income-tax Officer is directed to allow depreciation on it. " Before the Income-tax Appellate Tribunal (" the Tribunal "), the Revenue strongly urged that the Appellate Assistant Commissioner ought not to have accepted the assessee's claim of depreciation and development rebate at the enhanced cost of the assets, as the expenses incurred for levelling the land cannot be considered as part of the cost of the assets which are entitled for depreciation under the relevant section of the Act. The assessee, on the other hand, strongly supported the order of the Appellate Assistant Commissioner and justified his action. The Tribunal, more or less, adopted the reasoning of the Appellate Assistant Commissioner and consequently upheld his decision on this issue. It may be mentioned that for the assessment years 1970-71 and 1971-72, the Income-tax Officer as well as the Appellate Assistant Commissioner had followed their respective orders for the assessment year 1969-70. However, the Tribunal has passed a consolidated order wherein, as stated above, it has upheld the decision of the Appellate Assistant Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on referred to us pertains to the assessment year 1969-70 and reads as under : " 3. Whether, on a proper interpretation of the word 'due' occurring in rule 19A(3) of the Income-tax Rules and, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provision for taxation made by the assessee-company and standing at Rs. 2,69,000 as on January 1, 1968, could not be considered as a deductible debt within the meaning of the said rule 19A(3) by the Income-tax Officer while computing the relief due to it under section 801 of the Income-tax Act ? (R. A. No. 1747)." It is an agreed position that in view of the decision of this court in the case of CIT v. Boots Pure Drug Co. (I.) Ltd. [1993] 203 ITR 979 (Income-tax Reference No. 184 of 1977, dated October 21, 1992), the question referred to us has to be answered in favour of the assessee and against the Revenue. We answer the question accordingly. Question No. 4 relates to all the three years under reference and reads as under : " 4. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the Income-tax Officer could not grant the assessee-co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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