Law:

Section:

Section 32 of the Income-tax Act, 1961 – Depreciation – Allowance/Rate of – Assessment year 1964-65 – Assessee company incurred expenditure on driveways and compounded walls in respect of its petrol pumps and treating same as building or plant, claimed depreciation thereon – Tribunal found that petrol pumps were unusable for purpose of business unless there were driveways and that said pumps could not be used without fencing by walls and, therefore, these driveways and compounded walls should be classified as building on which depreciation was allowable – Whether order of Tribunal was justified – Held, yes FACTS The assessee company carried on business in petroleum had its petrol pumps. It incurred expenditure on the driveways and the compound walls in respect of said petrol pumps and treated the same as building or plant and claimed depreciation thereon. The Income-tax Officer disallowed the claim on the ground that driveways and the compound walls, could neither be treated as building nor plant nor machinery. The AAC upheld the order of the ITO. The Tribunal found that in order to enable the assessee to receive motor vehicles for the purpose of supplying petrol, the assessee had necessarily to have roads and having particular regard to the business carried on by the assessee it was also necessary to close the area by a compound wall. It, therefore, held driveways and the compound walls should be classified as building on which the depreciation was allowable. On reference : HELD Depreciation is allowable in respect of building, machinery, plant or furniture owned by the assessee and used for the purpose of the business or profession in terms of section 32. Even if it be considered that the building in respect of which depreciation was allowed under section 32, must be the same type of the assets contemplated by sub-section (2) of section 41, it could not be said that driveway or compound wall could not be either sold, discarded, demolished or destroyed in the contingencies contemplated by sub-section (2) of section 41. The word "building" has not been defined in the Act, and must, therefore, be construed in its ordinary sense having regard to the purpose for…

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