Gurinder Singh Kairon vs Commissioner of Income Tax

Ashok Bhan, J.—At the instance of the assessee, the Tribunal, Amritsar Bench, has referred the following question of law to this Court for its opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing depreciation on ice factory machinery at 10 per cent and not at 15 per cent claimed by the assessee ?"

For the assessment year 1978-79 ending 31-3-1978, the assessee filed his return showing an income of Rs. 19,220. The ITO passed the order u/s 143(3) of the income tax Act, 1961. On the ice factory machinery, ITO allowed depreciation at the rate of 10 per cent whereas the assessee claimed depreciation at the rate of 15 per cent. In view of this, depreciation at Rs. 33,378 was allowed on the written down value of the ice factory machinery of Rs. 3,33,781. The AAC confirmed the order of the ITO and found that there was no special rate provided for ice factory machinery and, therefore, depreciation at the rate of 10 per cent was admissible. The assessee filed further appeal before the Tribunal. The assessee relied upon a judgment of this Court in Commissioner of Income Tax Vs. Gurinder Singh Karion, , in the case of the assessee himself for the assessment year 1970-71 to contend that he was entitled to depreciation at the rate of 15 per cent. In that case, the Commissioner had come in reference against the order of the Tribunal allowing depreciation to the assessee at the rate of 15 per cent. On an interpretation of the same provisions the High Court had held that the assessee was entitled to depreciation at the rate of 15 per cent on the ice factory machinery. The Tribunal did not accept the contention of the assessee and relying upon its decision for the assessment year 1974-75 held that depreciation allowable would be at the rate of 10 per cent and not 15 per cent on the ice factory machinery.

The Tribunal referred to Item 13 of Appendix I part III(ii) of the income tax Rules, 1962 (''the Rules''), which reads as ''Refrigeration Plant Containers, etc. (other than racks) ''. The Tribunal held that depreciation of 15 per cent was allowable on ''Refrigeration Plant Containers'' and not on the ''Refrigeration Plant''. It was held that ''Refrigeration Plant Container'' is a different item and could not be considered as a ''Refrigeration Plant and container''. The Tribunal, therefore, did not follow the decision of this Court rendered for the assessment year 1970-71 and allowed depreciation at the rate of 10 per cent on the ice factory plant. The Tribunal distinguished Gurinder Singh Karion''s case (supra) by observing that the only question before the High Court in that case was whether the Refrigeration Plant was the same thing as the ice factory machinery and that the question decided in that case was not the same as in the present case.

The counsels for the parties have been heard.

The counsel for the assessee contended that the case of the assessee is squarely covered by the earlier decision of this Court whereas the counsel for the revenue contended that the entry in the relevant rule was ''Refrigeration Plant Containers, (other than racks) '' and not the ''Refrigeration Plant'' and, therefore, depreciation was not admissible at the rate of 15 per cent; that on general machinery and plant only 10 per cent depreciation was admissible and the special rate of 15 per cent was applicable to specified items. The case of the assessee did not fall in the specified item. It was also contended that the relevant provision of the rules was not brought to the notice of the Bench hearing the petition.

After considering the rival contentions of the counsels for the parties, we are of the view that the point involved in this case is squarely covered by the earlier decision of this Court in Gurinder Singh Karion''s case (supra). The High Court was considering the same provisions of law and after considering the rival contentions concluded that the assessee was entitled to depreciation at the rate of 15 per cent on the ''ice plant machinery'' which had been valued at Rs. 3,84,132 during the assessment year 1970-71. It is wrong to say that the question referred to the High Court in that case was different or the relevant provisions of the rules were not brought to the notice of the Bench. The question referred in that case was as under :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing depreciation at the rate of 15 per cent on the ice plant machinery valuing Rs. 3,84,132 during the assessment year 1970-71 ?

and the same was answered as under :-

"After hearing the learned counsel for the parties, we are of the opinion that question No. 1 has to be answered in the affirmative, in favour of the assessee and against the revenue. It is not disputed that with effect from April 1, 1970, the relevant rule was amended and depreciation on refrigeration plants, etc., was allowed to the extent of 15%.

Mr. Awasthy, the learned counsel for the revenue, has vehemently contended that the plant owned by the assessee in the present case is not covered by the term ''refrigeration plants'' and, thus, this entry is relevant for that purpose. This view was taken by the AAC and the Appellate Tribunal rightly reversed this view. We find that the Tribunal has elaborately discussed the connotation of the word ''refrigeration''. Reference has also been made to Webster''s Dictionary, Oxford Dictionary and Encyclopaedia Britannica, Vol. 19, p. 70. We may reproduce the relevant portion in Encyclopaedia Britannica, Vol. 19, p. 63, which is as follows :

''Refrigeration technology draws its basic knowledge from three interrelated yet distinct areas of science, namely, thermodynamics, heat transfer, and fluid flow. As refrigeration technology has advanced, improved process and materials have made possible many consumer products and industrial applications, from kitchen refrigerators and ice- cube makers to spot cooling of electronic devices and simulating Artic conditions for testing and research.''"(p. 302)

Respectfully following the view taken by this Court in the case of the assessee himself in Gurinder Singh Karion''s case (supra), the question referred to us is answered in the negative that is against the revenue and in favour of the assessee. The Tribunal was wrong in holding that the assessee was not entitled to depreciation at the rate of 15 per cent on the interpretation of the relevant rules on the ice factory machinery. It is held that the assessee is entitled to depreciation at the rate of 15 per cent on the ice factory machinery as claimed by him. No costs.