Law: Income Tax Act, 1961

Section: 32,33

Section 32, read with section 33, of the Income-tax Act, 1961 [Corresponding to sections 10(2)(vi) and 10(2)(vib) of the Indian Income-tax Act, 1922] - Depreciation - Allowance rate of - Assessment years 1959-60 to 1961-62 - Whether fencing constructed around refinery processing units constitute 'plant' for purposes of grant of depreciation allowance under section 10(2)(vi) and development rebate under section 10(2)(vib) of 1922, Act - Held, yes FACTS The assessee-company claimed depreciation and development rebate on fencing that was put up around the refinery processing units. The ITO refused said claim on the ground that such fencing did not constitute "plant". On appeal, the AAC treated the fencing put up around the refinery processing units as a plant for the purposes of grant of depreciation allowance and development rebate. On second appeal, the Tribunal confirmed order of AAC. On reference: HELD It was not disputed that under the Petroleum Rules, 1937, it was obligatory upon a person refining or blending petrol to surround the installation by a wall or fence and precaution was required to be taken to prevent unauthorised persons from having access to its storage shed or installation and the rules also provided that the fencing around the refinery processing unit should be approved by the chief inspector. That being the position, it was clear that the refinery processing unit could not be put into use without protective fencing and from that point of view the fencing could be regarded as part of the processing unit. Moreover, the Tribunal had found that from the cost as well as the materials used it was clear that the fencing was a substantial structure. It had further found that the process units were installed at a cost exceeding Rs. 8 crores and it was these process units that were surrounded by protective fencing and that the nature of construction clearly indicated that there was a considerable degree of durability to the fencing. In view of these facts which had been found by the Tribunal, it would be difficult to resist the claim of the assessee that the fencing surrounding the refinery processing units should be regarded as part of the plant. If…

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