TMI Blog1993 (6) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ears 1981-82 and 1982-83, owned several tea estates scattered over the Nilgiri hills. On the electrification of labour quarters/lines in the different tea estates, the assessee-company incurred an expenditure of Rs. 2,35,199 in 1981-82 and Rs. 5,25,956 in 1982-83. The expenditure which was incurred by way of electrification of the different quarters in the tea estates consisted of stationery items, wiring and fittings of electric light and fan installations. The assessee-company claimed before the authorities for the first year, i.e., 1981-82, the expenditure incurred on 897 labour quarters and in 1982-83 on 1,324 labour quarters. For the purpose of depreciation of the electrification of each quarter, the expenditure incurred was divided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the electrification of labour quarter/lines for each unit cannot be considered as either machinery or electrical machinery. Hence, according to the Commissioner of Income-tax, the Income-tax Officer has incorrectly allowed depreciation at 100 per cent. on the cost of electrification of labour quarters/lines and the order, according to the Commissioner of Income-tax, was erroneous to that extent. However, the Commissioner of Income-tax directed the Income-tax Officer to recompute the depreciation at ten per cent. on the cost of electrification of labour quarter/lines and suitably amend the assessment order. On appeal before the Tribunal, the Tribunal pointed out that there was contradiction in the order of the Commissioner of Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso to section 32(1)(ii) of the Act. At the hearing before us, it has been contended by Dr. Pal that the view that electrification of labour quarters should be treated as machinery and should be allowed 100 per cent. depreciation in terms of the proviso to section 32(1)(ii) of the Act is in accordance with law, should be upheld. It is his contention that the nature of the assets on which depreciation is claimed is wiring and fittings of electrical light and fan installations and this has not been disputed at any stage by any of the authorities. He has also submitted that in view of the factual position and in view of item III of Appendix I, Part I of the Schedule to the Income-tax Rules, 1962, relating to "machinery and plant", the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each unit of the labour quarters itself is separately identifiable. It is not that the cost of the entire electrical fittings of the labour lines should be taken as one unit without unitary separation. When each quarter is a separate unit, the electrical fittings therein should also be taken as one separate unit and the proviso to section 32(1)(ii) shall apply. We take note that the Madras High Court in Mysore Dasaprakash v. CIT [1989] 177 ITR 38 has held that electrical switch boards, distribution switch boards, etc., and sanitary pipeline installations in a hotel building should be considered as one integrated unit and there is no scope for dissecting these items into different component parts for each room so as to claim deduction in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstallation in one quarter would not necessarily affect the fittings and installations in the other quarter. These tests of divisibility would, however, vary from case to case depending on the facts of each case. As in the case of a hotel, there is no element of divisibility. The hotel as such is one and indivisible. For the reasons stated, we answer the question in this reference in the affirmative and depreciation at the rate of 100 per cent. would be allowable if the cost for electrification of each quarter does not exceed the ceiling provided for in the proviso to section 32(1)(ii). The answer is in favour of the assessee and against the Revenue. There will be no order as to, costs. NURE ALAM CHOWDHURY J.-I agree. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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