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The Tax Publishers2013 TaxPub(DT) 0942 (All-HC) : (2013) 050 (I) ITCL 0445 : (2012) 349 ITR 0418 INCOME TAX ACT, 1961 --Depreciation--Higher rate Whether depreciation on the cooling chambers of the cold storage to be allowed at the rate of 25 per cent as plant instead of 10 per cent as building--Assessee was running a cold storage and had claimed depreciation at the rate of 25 per cent on the same including cooling plant and the special chambers lined with thermocole. Authorities however, allowed depreciation at the rate of 10 per cent on the same. According to ITAT, after the amendment in section 43(3) with effect from 1-4-2004, the building had been specifically excluded from the definition of plant and the cold storage building was a specific type of building which required chambers fitted with thermocole. Nevertheless it should remain as a specific building and needed a separate cooling plant, therefore, it held that for cooling plant, assessee was entitled to depreciation at the 25 per cent and for thermocole lined chambers, assessee was entitled to depreciation at the normal rate of 10 per cent. *Held:* Not rightly so, as in case of cold storage it was found that the building is required to be constructed for cooling chambers in a specific process and manner and without such specific process and manner a chamber could not be commissioned, for which a licence was also required to be obtained. The whole building, which houses the chambers has to be constructed according to specifications in a particular manner. Without a thermocole a chamber can not function independently and at the same time without the building the thermocole cannot have a separate existence. Both these parts are integral parts of each other. Therefore, the plant of cold storage also cannot be separated in a manner that the special chambers might have separate existence and be treated as building, sans cooling plant for providing a different rate of depreciation. Accordingly, depreciation on the cooling chambers of the cold storage in the relevant assessment year would be allowed at the notified rate of 25 per cent. Income Tax Act, 1961, Section 32 In the Allahabad High Court Sunil Ambwani & Pankaj Mithal J.J. Shyam Enterprises v. CIT ITA No. 209 of 2008 A.Ys. 2001 to 2005 4 August, 2011 Income Tax Act, 1961, S. 32 *Decision:* In assessees favour. Appellant by : R. P. Agarwal, Advocate Respondent by : Bharat Ji Agrawal, Senior Advocate, assisted by A.N. Mahajan JUDGMENT SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0942 (All-HC) : (2013) 050 (I) ITCL 0445 : (2012) 349 ITR 0418

INCOME TAX ACT, 1961

--Depreciation--Higher rate Whether depreciation on the cooling chambers of the cold storage to be allowed at the rate of 25 per cent as plant instead of 10 per cent as building--Assessee was running a cold storage and had claimed depreciation at the rate of 25 per cent on the same including cooling plant and the special chambers lined with thermocole. Authorities however, allowed depreciation at the rate of 10 per cent on the same. According to ITAT, after the amendment in section 43(3) with effect from 1-4-2004, the building had been specifically excluded from the definition of plant and the cold storage building was a specific type of building which required chambers fitted with thermocole. Nevertheless it should remain as a specific building and needed a separate cooling plant, therefore, it held that for cooling plant, assessee was entitled to depreciation at the 25 per cent and for thermocole lined chambers, assessee was entitled to depreciation at the normal rate of 10 per cent. Held: Not rightly so, as in case of cold storage it was found that the building is required to be constructed for cooling chambers in a specific process and manner and without such specific process and manner a chamber could not be commissioned, for which a licence was also required to be obtained. The whole building, which houses the chambers has to be constructed according to specifications in a particular manner. Without a thermocole a chamber can not function independently and at the same time without the building the thermocole cannot have a separate existence. Both these parts are integral parts of each other. Therefore, the plant of cold storage also cannot be separated in a manner that the special chambers might have separate existence and be treated as building, sans cooling plant for providing a different rate of depreciation. Accordingly, depreciation on the cooling chambers of the cold storage in the relevant assessment year would be allowed at the notified rate of 25 per cent.

Income Tax Act, 1961, Section 32

In the Allahabad High Court

Sunil Ambwani & Pankaj Mithal J.J.

Shyam Enterprises v. CIT

ITA No. 209 of 2008

A.Ys. 2001 to 2005

4 August, 2011

Income Tax Act, 1961, S. 32

Decision: In assessees favour.

Appellant by : R. P. Agarwal, Advocate

Respondent by : Bharat Ji Agrawal, Senior Advocate, assisted by A.N. Mahajan

JUDGMENT