TMI Blog1974 (5) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... r containing insulation materials constituted 'plant' within the meaning of section 43(3) of the Income-tax Act, 1961, and that it was entitled to depreciation as on a 'plant' ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the payment of Rs. 14,742 to the Allahabad Electric Supply Undertaking towards cost of transformer and service line for replacing the existing line to enable it to have higher K. V. A. electric power for cold storage was an allowable expenditure in computing the income of the assessee-firm for the assessment year 1965-66 ? " The assessee is a registered partnership firm. It purchased, as a going concern, a cold storage styled as M/s. Govind Hari Cold Storage a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed as a personal expenditure nor as an expenditure of capital nature, was an expenditure which had to be deducted in computing its income for the year 1965-66. Being aggrieved by the aforementioned order of the Tribunal, the Commissioner of Income-tax moved applications and got the aforementioned two questions referred to this court for opinion. Assessee's case was that the factory building in respect of which it claimed depreciation at the rate of 15% was a part of an air-conditioning machinery or plant. At the request of the assessee, the learned members of the Tribunal inspected the cold storage and found that the walls of the building in respect of which depreciation at 15% was being claimed was being used as freezing chamber con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly be included in it. Viewed in this light, the building in question would be a part of the plant used for air-conditioning the assessee's cold storage and the assessee would be entitled to claim depreciation with regard to it at 15% on its written down value. So far as the second question is concerned, the Tribunal found that in the previous year relevant to the assessment year 1965-66, the assessee had paid a sum of Rs. 14,742 to the Allahabad Electric Supply Undertaking as cost of transformer and charge for service line for meeting the assessee's requirement for extended load which could not be supplied over the existing line. However, the ownership of the line was to vest in the undertaking. It is not disputed that the aforesaid expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... productive unit as a whole and not pick out parts therein which are new. Where only a replaceable part of composite piece of machinery is renewed, such part having a comparatively lesser life than the machinery itself, it would be reasonable to regard the cost of such renewal as revenue expenditure. It appears that the Supreme Court further accepted the proposition that, where certain moving parts of the machinery had to be periodically replaced and it is found that the type of the replacement was not available in the market, the assessee introduced an alternative system thereby replacing certain parts, the expenditure incurred on such an item was a revenue expenditure. This means that in a case where the productive unit set up by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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