STATE OF MADRAS Vs. GLENBURN ESTATES LIMITED

JUDGEMENT

(1.) IN this application preferred by the State under section 54(1) of the Madras Plantations Agricultural Income -tax Act (V of 1955), two questions arise for determination : (1) was the Tribunal right in allowing the bonus paid to the Assistant Superintendent employed by the assessee as a permissible deduction under section 5(e) of the Act and (2) was the Tribunal right in allowing the whole of the depreciation claimed by the assessee with reference to one item of machinery, referred to as the pulper ? The first of these questions we have to answer against the petitioner and in favour of the assessee in view of our decision in T. C. No. 32 of 1957, etc., in which we have just delivered judgment. The payment of bonus was not to a " worker " as defined by Central Act LXIX of 1951, and so fell outside the scope of section 5(1). As it was however a payment made to an employee, and as it satisfied the test of section 5(e), that it was an expenditure wholly and exclusively laid out for the purpose of land or plantation, the Tribunal was right in allowing this claim of the assessee for deduction

(2.) THE amount allowed as depreciation under the second head was Rs. 36. But the question has been raised as one of importance to the department. Section 5(f) provides for depreciation allowances for buildings, machinery, plant or furniture. Section 5(f) itself, contemplates rules being made for regulating the grant of statutory depreciation allowance. The proviso to section 4(3) of the Rules runs

(3.) AS the Tribunal pointed out, the provision to rule 4(3) has apparently been framed on the model of the rules regulating the computation of depreciation allowances under the Income -tax Act. The rule itself has not been elegantly framed and in trying to include within the scope of the proviso to rule 4(3) more than one concept, difficulty of actual application may arise. But if the scope of the rule read with the form to which it refers is considered, there should be no difficulty in holding that the Tribunal was right in the view it took, that merely because the pulper was worked for a portion of the year, the assessee was not disentitled to the full depreciation allowance, because the pulper had necessarily to be used only during the working season and as we have already pointed out, it was a seasonal business which could not be undertaken all through the yearRule 4(3) itself refers to the particulars to be furnished in Part III of the prescribed Form No. 1 - -column 7 of Part III requires the assessee to give the date from which the addition etc., referred to in column 6 have been used for the purpose of agricultural plantations. There is no specific column in Part III to apply, for instance, to seasonal factories to verify during what season or what portion of the year the factory worked. As the Tribunal pointed out, there was a specific provision in the rules framed under the Income -tax Act for granting depreciation allowances to factories where the working was seasonal. Though it is seasonal, it is deemed to be at work all through the year for regulating grant of depreciation allowance under the Income -tax Act. As we read rule 4(3) and the proviso along with it, we do not understand it was the intention of the Government in the case of factories working only during seasons to restrict the depreciation allowance with reference to the time factor, that is, with reference to the working season in relation to the year. The test really should be, in the case of seasonal factories, whether the machinery was available for use and for the whole use of agricultural purposes right through the working season. If that condition were to be satisfied, we see nothing in the rule or in the proviso thereto to disentitle the assessee to the whole of the depreciation allowance for that year, though the machinery could have been used only for a portion of the year, that is, during the working season. A very literal interpretation of the proviso would lead even to this absurdity. Obviously, the machinery could not be used all day and every day right through the year.