Commissioner of Income Tax vs Premier Vegetable Products Ltd.

V.K. Singhal, J.—The Income Tax Appellate Tribunal has referred the following question of law arising out of its order dated November 20, 1980, u/s 256(1) of the Income Tax Act, 1961, in respect of the assessment year 1972-73 :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the electric motors and starters are part and parcel of the plant and machinery and, therefore, they are entitled to extra-shift depreciation allowance?"

The brief facts of the case are that the assessee is a manufacturer of vanaspati and for the establishment of its unit, it purchased an electric motor and starters. The claim for extra-shift depreciation allowance was made on the purchase of motor and starters. The assessee contended that the motor and starters are part and parcel of the machinery and, therefore, it should not be considered as electric machinery. On behalf of the Revenue, it was submitted that the process of electricity can be divided into three parts, (i) the generation of energy, (ii) distribution and transmission of energy so generated, and (iii) actual feeding of machinery which are to be moved by the electricity. The Tribunal was of the opinion that the motor and starters are operated by electricity as well as from diesel and battery, etc., and the motors which are operated by battery cannot be considered to be electric machinery simply because they are operated by electricity and it was found that the function is to impart motion to some machinery to which it is attached. So every motor is not connected with electricity and simply because some of the motors are operated by the electricity, it cannot be said that the motors are not part and parcel of the machinery. The claim for extra-shift depreciation allowance was allowed.

We have considered over the arguments of learned counsel for the Revenue. Learned counsel submits that extra-shift depreciation allowance is not allowed in respect of the items of machinery or plant which have been specified under appendix. Under Rule 5 of the Income Tax Rules, no extra-shift allowance can be allowed in respect of the items which have been mentioned thereunder. At item No. 1 electrical machinery with switch gear at their starting point and wiring and fitting of electric light and fans have been specified and as such even if an item falls within the category of plant and machinery, still the benefit of extra-shift depreciation allowance will not be available if it falls in the category of electric machinery. It is not in dispute that the electric motor and starter fall within the term machinery. The only point to be decided is as to whether they could be said to be electric machinery.

In COMMISSIONER OF Income Tax, MADRAS Vs. MIR MOHAMMAD ALI. ARUNA MILLS LTD. : INTERVENER., it was observed by the apex court that machinery is a word of common parlance and not a technical word. The meaning given in common parlance has to be given. The Judicial Committee in the case of Corporation of Calcutta v. Chairman, Cossipore and Chitpore Municipality, AIR 1922 PC 27 ; ILR [1922] 49 Cal 190 observed that the word machinery when used in the ordinary sense, prima facie, means some mechanical contrivances which, by themselves or in combination with one or more other mechanical contrivances, by the combined movement and interdependent operation of their respective parts generate power, or evoke, modify, apply or direct natural forces with the object in each case of effecting a definite and specific result.

The word "machinery" has been defined as under :

"Machinery n(sic)the component parts of a complex machine ; machines collectively, machine a structure, or built-up fabric of any kind specifically the human or animal frame; a vehicle, as for merely a carriage, cart, etc., a vehicle operated mechanically, esp. an automobile a structure consisting of a frame work and of various fixed and moving parts for doing some kind of work, mechanism, as a sewing machine ; in mechanics, a device that transmits or change the application of energy ; the lever, wheel and screw are called simple machines."

Words and Phrases, Permanent edition 14, has defined "electric plant" as under :

"An ''electric plant'' includes the steam engines or other prime motors, the generating dynamo or dynamos, the lamps and other electro-receptive, devices, and the circuit connected therewith.

''Plant'' as defined in Houslon''s Electrical Dictionary is a word sometimes used for installation, or for the apparatus required to carry on any manufacturing operation. An ''electric plant'' includes the steam engines or other prime motors, the generating dynamo or dynamos, the lamps and other electro-receptive devices, and the circuit connected therewith.

In view of Public Service Commissions Law, defining the term ''electric plant'' to include all realty, fixtures, and personalty used in connection with generation, transmission, distribution, or sale of electricity for light, heat, or power, an electric company, attempting under private grant to dispose of current to private consumers, is ''beginning construction of an electric plant'' within Section 68, giving the Commission authority to supervise construction. People Exrel Oneonta Light and Power Co. v. Public Service Commission Second Dist. (167 N. Y. S. 486, 489, 180 App Div 32)."

Electricity is an imponderable and invisible agent producing light, heat and other physical phenomena. In the definition of electric plant-prime motors have been considered as electric plant, as such the electric motor is an electric machine and in common and commercial parlance is also considered as electric machine.

From a perusal of the order of the Tribunal, we found that the working of the motor by way of diesel and electricity or battery has been wrongly taken as the basis because in the case of motors operated by electricity, power is generated and so is the position with the motor operated by diesel. The power used in all types of motors leaves no distinction of source from which it has come. It is, therefore, held that the Tribunal was not justified in holding that electric motors and starters are part and parcel of the plant and machinery and not electric machinery and, therefore, they are entitled to extra-shift depreciation allowance.

Consequently, the reference is answered in favour of the Revenue and against the assessee. No order as to costs.