Law:

Section:

Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/rate of - Assessment year 1985-86 - During relevant accounting year, assessee company constructed buildings and allotted them to employees drawing salary of more than Rs. 1000 per month - Assessee's claim of initial depreciation under section 32(1)(iv) in respect of said buildings was disallowed by Tribunal on ground that in terms of said section, such buildings should be occupied by employees drawing salary of Rs. 10,000 per annum or less and that assessee had not fulfilled that condition - Whether Tribunal being final fact finding authority, its conclusion was to be upheld - Held, yes Words and phrases : Expression 'solely' as occurred in section 32(1)(iv) of the Income-tax Act, 1961 FACTS During the accounting year relevant to the assessment year 1985-86 the assessee constructed buildings including non-factory building of temporary sheds and allotted them to the employees. It claimed initial depreciation at the rate of 40 per cent under the provisions of section 32(1)(iv). The ITO disallowed the assessee's claim after having found that the employees who were allotted quarters were drawing a salary of more than Rs. 1,000 per month. The Commissioner (Appeals) concurred with the view of the ITO. The Tribunal also upheld the said view. On reference : HELD The Tribunal rightly held that the expression "solely" in the clause (iv) of section 32(1) indicated that such buildings should be occupied by employees drawing a salary of Rs. 10,000 per annum or less. The assessee-company, it was held, did not fulfil that condition. In view of the conclusion of the final fact-finding authority, the High Court was inclined to uphold the view of the Tribunal that the assessee was not entitled to the initial depreciation as it did not fulfil the condition prescribed for such deduction. Note : The case was decided in favour of the revenue. S. Ravi for the Applicant. S.R. Ashok for the Respondent. JUDGMENT M. H. S. Ansari, J.-Heard learned counsel for the respective parties. The instant reference is at the instance of the assessee. For the assessment year 1985-86, the Income-tax Appellate Tribunal (the ITAT)…

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