COMMISSIONER OF INCOME TAX V. BHARAT LINDERS PVT. LTD.

ITR/255/1985

AI Insights

The case involves the Commissioner of Income Tax contesting the decision of the Income Tax Appellate Tribunal, which allowed Bharat Linders Pvt. Ltd. to claim depreciation and investment allowance on drawings and specifications for the assessment year 1980-81. Initially, the Income Tax Officer (ITO) rejected the claim, but it was later allowed by the CIT(A) based on a Gujarat High Court decision in CIT, Gujarat-II vs. Elecon Engineering Co. Ltd. The Tribunal upheld this decision, leading to the revenue's reference to the High Court. The core legal issue was whether the investment allowance and depreciation should be granted on the capitalized value of drawings and specifications.

• Counselvise Citation: [2001] 140 COUNSELVISE.COM (IT) 718509 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 23-01-2001
• Assessment Year: misc
• Other Referred Cases: Scientific Engineering House P. Ltd. vs. CIT, CIT, Gujarat vs. Elecon Engineering Co. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MANISH SHAH
• Assessee Lawyers: AKIL KURESHI; MANISH BHATT
• Keywords: Depreciation; Investment allowance; Capitalized value; Drawings and specifications
• Section: 43(3)

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 255 of 1985 For Approval and Signature: Hon'ble MR.JUSTICE J.M.PANCHAL and Hon'ble MR.JUSTICE M.S.SHAH ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus BHARAT LINDERS PVT. LTD. -------------------------------------------------------------- Appearance: MR AKIL KURESHI with MR MANISH R BHATT for Petitioner MR MANISH J SHAH for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE J.M.PANCHAL and MR.JUSTICE M.S.SHAH Date of decision: 23/01/2001 ORAL JUDGEMENT (Per : MR.JUSTICE J.M.PANCHAL) At the instance of the revenue, the Income Tax Appellate Tribunal, Ahmedabad Bench \"A\" has referred the following question of law for the opinion of this Court in respect of assessment year 1980-81 :- \"Whether on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the investment allowance and depreciation should be allowed on the capitalized value of drawings and specifications ?\" 2. The assessee is a Company. It claimed the depreciation and investment allowance on drawings and specifications. The ITO rejected the claim of the assessee. On appeal, the CIT(A), following the decision of the Gujarat High Court in the case of CIT, Gujarat-II vs. Elecon Engineering Co. Ltd., (1974) 96 ITR 672 allowed the claim of the assessee. On further appeal filed by the revenue, the Tribunal following the above quoted decision of the Gujarat High Court confirmed the order of the CIT(A) and dismissed the appeal of the revenue. Thereupon, reference application was made by the revenue and the question which is quoted above has been referred to us for our opinion. 3. The learned counsel for the parties state at the Bar that the controversy raised in the present reference is concluded by the decision of the Supreme Court in Scientific Engineering House P. Ltd. vs. CIT, (1986) 157 ITR 86 which is followed by the Supreme Court in CIT, Gujarat vs. Elecon Engineering Co. Ltd., (1987) 166 ITR 66. In the above quoted decisions, it is held that the drawings and patterns were books and since books were comprehended within the definition of `plant' in section 43(3) of the Income Tax Act, 1961, they were plant and depreciation was allowance in relation to the drawings and patterns. 4. Having regard to the principle enunciated by the Supreme Court in the above referred to decisions, we hold that the Tribunal was right in coming to the conclusion that the investment allowance and depreciation should be allowed on the capitalized value of drawings and specifications. The reference is accordingly answered in the affirmative i.e. in favour of the assessee and against the revenue. The reference stands disposed of with no order as to costs. (J.M. Panchal, J.) (M.S. Shah, J.) sundar/- "