Caltax Oil Refining (India) Limited vs Commissioner of Income Tax

T.D. Sugla, J.—These are cross references. The Income Tax Appellate Tribunal has referred to this court the following questions of law u/s 256(1) of the Income Tax Act, 1961 :

At the instance of the Commissioner :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the inter-connecting roads and the road running along the boundary wall of the refinery premises of the assessee-company come within the scope of the word ''building'' and as such are entitled to depreciation under the Income Tax Act, 1961 ?"

At the instance of the assessee :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not entertaining the alternative claim that the roads, etc., in the refinery plot be regarded as a plant for the purpose of sections 32 and 33 of the Income Tax Act even though no new facts were necessary for considering the claim ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the roads, etc., inside the housing colonies do not form part of the ''building'' and do not qualify for depreciation allowance ?"

The assessee is a company. The proceedings relate to assessment years 1969-70 to 1971-72. Counsel are agreed that, in view of our court''s judgment in the case of Commissioner of Income Tax, Bombay City-I Vs. Colour-chem Ltd., , the question referred to us at the instance of the Commissioner requires to be answered in the affirmative and in favour of the assessee.

Counsel are also agreed that the answer to the first question referred to this court at the instance of the assessee on merits has got to be answered in the negative and in favour of the Revenue, Following the very same decision in Commissioner of Income Tax, Bombay City-I Vs. Colour-chem Ltd., . In that view of the matter, it is only of academic interest whether the Tribunal ought to have entertained the alternative claim of the assessee to the effect that the roads, etc., in the refinery be regarded as a plant for the purpose of sections 32 and 33 of the Income Tax Act, 1961.

As regards the second question at the instance of the assessee, it is common ground that the roads in question are inside the housing colonies. It is also common ground that the buildings in the housing colonies of the employees are buildings entitled to depreciation. In other words, the admitted position is that the buildings in the housing colonies represent the assessee''s business assets entitled to depreciation. The question, therefore, is whether the approach roads inside that housing colony or colonies can or cannot be treated as "building". Having regard to what has been held by our court in Commissioner of Income Tax, Bombay City-I Vs. Colour-chem Ltd., and by the Calcutta High Court in Oil India Ltd. Vs. Commissioner of Income Tax (Central), , the test to be applied in such cases is whether the roads or roadways have to be regarded as adjuncts to the factory building, in this case housing colonies or something appurtenant to such buildings. In the facts as they are stated in the statement of the case, we are inclined to hold that the roads in question are adjuncts to the buildings in the housing colonies and are appurtenant thereto. Accordingly, the second question also requires to be and is hereby answered in the negative and in favour of the assessee. No order as to costs.