Commissioner of Income Tax vs Steel City Beverages (P) Ltd.

At the instance of the Revenue, this court u/s 256(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), on an application for the assessment year 1979-80, asked the Tribunal to refer the following question to this court for its opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in directing to allow depreciation at cent per cent. new purchases of bottles and containers worth Rs. 29,55,813 ?"

The assessee is a private limited company and it derives income from sale of cola, soda and ice boxes, etc. It had claimed Rs. 29,55,813 as depreciation u/s 32(1)(ii) of the Act, which was allowed 100 per cent., as the purchase price of each bottle was less than Rs. 750. The Income Tax Officer held that the bottles could not be equated with plant and depreciation could not be allowed, as claimed by the assessee. On appeal, however, the Commissioner of Income Tax referring to a decision of the Delhi High Court in Commissioner of Income Tax Vs. National Air Products Limited, held that the bottles purchased by the assessee constituted plant and the assessee was entitled to depreciation at 100 per cent. as claimed. On appeal being preferred before the Tribunal by the Revenue the same was also dismissed. As noted above the question has been referred for our decision.

Mr. Pawan Kumar, learned counsel appearing on behalf of the assessee, referred to two decisions : one of the Rajasthan High Court in Commissioner of Income Tax Vs. Jai Drinks (P.) Ltd., and another that of the Andhra Pradesh High Court in Commissioner of Income Tax Vs. Sri Krishna Bottlers Pvt. Ltd., . In both the decisions a similar question has been raised and both the courts held that the bottles constitute plant within the meaning of Section 43(3) of the Act and as such the assessee was entitled to depreciation at 100 per cent. Reference to the Delhi High Court decision, Commissioner of Income Tax Vs. National Air Products Limited, which finds mention in the order of the Commissioner of Income Tax (Appeals) also supports the aforesaid view. Then Mr. Pawan Kumar also referred to a decision of the Supreme Court in Commissioner of Income Tax, Andhra Pradesh Vs. Taj Mahal Hotel, Secunderabad, , where the Supreme Court defined the plant.

We have gone through the aforesaid judgments and we see no reason to differ with the view taken by the Delhi, Rajasthan and Andhra Pradesh High Courts. In this view of the matter, we answer the question in the affirmative against the Revenue and in favour of the assessee.

There will be no order as to costs.