MYSORE DASAPRAKASH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a registered firm carrying on a hotel business. For the assessment year 1975-76 relevant for the accounting year ending on March 31, 1975, the assessee filed a return admitting an income of Rs. 15,820. THE Income-tax Officer disallowed depreciation claimed by the assessee under the proviso to section 32(1)(ii) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") at the rate of 100% on electrical switch boards, distribution boards, etc., and sanitary pipeline installations in respect of thirteen new rooms constructed in the existing building on the ground that such installations should be considered as an integrated unit and depreciation allowed at 10% and that it was not correct to work out separately the cost of individual items of materials used and then to ascertain whether the cost did not exceed Rs. 750. On appeal by the assessee before the Appellate Assistant Commissioner, it was held that though switch boards, distribution boards, verandah lights, etc., could be regarded as items of plant or machinery yet the expenditure incurred on the electoral system has to be treated to one integrated unit and cannot be split up into thirteen individual units and likewise, the sanitary pipelines and fittings should also be regarded as constituting an integrated part of the basic water supply system. In that view, the Appellate Assistant Commissioner declined to allow 100% depreciation as claimed by the assessee in relation to the switch boards, distribution boards, sanitary pipelines and other fittings. On further appeal to the Tribunal, the claim of the assessee for relief under the proviso to section 32(1)(ii) of the Act was rejected with reference to the cost of main switch board, distribution board, verandah lights, etc., and sanitary pipelines and fittings on the view that there was no scope whatever for breaking up the aggregate expenditure incurred on an integral plant to provide electricity and water supply to the rooms.

(2.) AT the instance of the assessee, under section 256(1) of the Act, the Tribunal has referred the following questions of law for the opinion of this court: