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1999 DIGILAW 490 (BOM)

COMMISSIONER OF INCOME TAX, BOMBAY v. HENLY FARM

1999-07-26

B.P.SARAF, RANJANA DESAI

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Judgment RANJANA DESAI, J. ( 1 ) BY this reference under section 256 (1) of the Income Tax Act, 1961, the Income Tax appellate Tribunal has referred the following question of law to this Court for opinion :"whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the Bldg. used by the assessee in the business of poultry farming should be treated as factory Bldg. within the meaning of that expression in Col. 3 of the Table of rates for which depreciation is admissible given in Part I of Appendix 1 of the I. T. Rules, 1962?" ( 2 ) THE facts which are relevant for the purposes of this reference are as under :- (A)THE assessee is running a poultry farm on modern lines. For the assessment year 1980-81 the assessee claimed depreciation at 10%, in respect of the building used for the purposes of its business. The Income Tax Officer disallowed the assessee s claim. He allowed depreciation at 5%. (b)In the appeal carried by the assessee the Appellate Assistant Commissioner of Income Tax accepted the assessee s contention. He held that the building used by the assessee should be treated as factory building within the meaning of expression in column 3 of the table of rates for depreciation in Part I of Appendix I of the Income Tax Rules, 1962. The Income Tax Officer was directed to allow depreciation of factory building at 10% as against 5%. (c)In appeal carried to the Income Tax Appellate Tribunal, the Tribunal affirmed the finding of the Appellate Authority i. e. Appellate Assistant Commissioner that the building used by the assessee will have to be treated as a factory building and as such entitled to depreciation at 10%. It is against this background that the present reference is filed. ( 3 ) WE have heard the learned counsel appearing for both sides. The controversy in this question is concluded by the ratio of the decision of this Court in C. I. T. vs. Deejay hatcheries, (1995) 211 ITR 652 (Bom.) which is since approved by the Supreme Court in C. I. T. vs. Venkateshwara hatcheries, (1999) 237 ITR 174. ( 3 ) WE have heard the learned counsel appearing for both sides. The controversy in this question is concluded by the ratio of the decision of this Court in C. I. T. vs. Deejay hatcheries, (1995) 211 ITR 652 (Bom.) which is since approved by the Supreme Court in C. I. T. vs. Venkateshwara hatcheries, (1999) 237 ITR 174. In Deejay Hatcheries case (supra) this Court after considering the relevant provisions of Income Tax Act observed as under :-"from a conjoint reading of sections 80j, 10 (27) and 80jj of the Act, it is clear that Parliament has made provision for giving incentive to persons engaged in the business of livestock breeding or poultry or dairy farming distinct and different from those made for industrial undertakings producing or manufacturing articles. The income from the business of livestock breeding, poultry and dairy farming was totally exempt from Income Tax till March 31, 1976, by virtue of the provision contained in section 10 (27) of the Act. Separate provision was made for the same with effect from April 1, 1976, by enacting section 80jj. Section 80j deals with industrial undertakings engaged in producing or manufacturing articles. It does not apply to business of livestock breeding or poultry or dairy farming. Evidently, such business cannot be termed as industrial undertaking producing or manufacturing articles. We are, therefore, of the clear opinion that the business of poultry farming in which the assessee in the present case is engaged cannot be held to be an industrial undertaking merely because of the fact that the said business is run with the aid of modern plant and machinery. " ( 4 ) IN view of the above, the building used by the assessee for the poultry business cannot be treated as factory building within the meaning of that expression in clause 3 of the table of rates for which depreciation is admissible, given in Part I of Appendix 1 of the Income Tax rules, 1962. ( 5 ) THE learned counsel for the parties, therefore, agree that this question will have to be answered in favour of the revenue. In this view of the matter, following the ratio of the above decision, we answer the question referred to us in the negative i. e. in favour of the revenue and against the assessee. ( 5 ) THE learned counsel for the parties, therefore, agree that this question will have to be answered in favour of the revenue. In this view of the matter, following the ratio of the above decision, we answer the question referred to us in the negative i. e. in favour of the revenue and against the assessee. ( 6 ) THE reference is disposed of accordingly with no order as to costs. Reference answered in favour of revenue.