SHYAM ENTERPRISES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) We have heard Shri R.P. Agarwal, learned counsel for the appellant-assessee. Shri Bharat Ji Agarwal, senior advocate assisted by Shri A.N. Mahajan, appears for the Department. This appeal under section 260A of the Income-tax Act, 1961, has been preferred on substantial questions of law as follows:

(2.) The assessee is running a cold storage. It claimed depreciation on cold storage at the rate of 25 per cent. including cooling plant and the special chambers, lined with thermocole and which, according to the assessee, do not have any separate existence from the cooling plant. The authorities allowed depreciation at the rate of 10 per cent. They made the addition of Rs. 5,28,878. The Income-tax Appellate Tribunal opined that after the amendment in section 43(3), with effect from April 1, 2004, the building has been specifically excluded from the definition of plant; section 32 provides for different rates of depreciation for building, machinery, plant or furniture, ships, buildings used for hotels, aeroplanes and other items mentioned therein. The word "plant" is given an inclusive meaning under section 43(3) which does not include buildings. The rules prescribing the rates of depreciation in Appendix I with reference to rule 5 gives rates in a table on which depreciation is admissible. These specifically provide for grant of depreciation dealing with furniture and fittings, separately than the machinery and plant. The chambers, which required thermocole lining, have separate existence. The cold storage building is a specific type of building, which requires chambers fitted with thermocole, nevertheless it should remain as a specific building and needs a separate cooling plant. The Tribunal found that for cooling plant the assessee already enjoys depreciation at the rate of 25 per cent. and that thermocole fitted chambers are entitled to depreciation at the normal rate of 10 per cent., as given by the lower authorities.

(3.) Shri R.P. Agarwal, learned counsel for the appellant, submits that the amendment in section 43(3), with effect from April 1, 2004, does not make any change in the definition of the word "plant", which remains an inclusive definition. It includes buildings or furniture and fittings, which are other than, and are not integrally connected with the plant. The building, which does not have separate existence, and is integral part of the plant, used for the purposes of business or profession, is not to be treated separately for depreciation. He submits that the ratio of the judgment of the Calcutta High Court in CIT v. Shree Gopikishan Industries P. Ltd., 2003 262 ITR 568, is entirely applicable to the facts of this case. The Calcutta High Court considered the distinction between plant and building in the case of cold storage. It was held relying upon the nature of the building of cold storage, which requires insulation, refrigeration and sanitary or other arrangement strictly in accordance with the West Bengal Cold Storage (Licensing and Regulation) Act, 1966, the storage chamber itself is an apparatus and tool of the trade through which the business is carried on. The Calcutta High Court held as follows (page 572):