Venco Research & Breeding Farm Pvt., Pune v. Addl. CIT,Range-7,, Pune

ITA 1354/PUN/2005 | 2001-2002
Pronouncement Date: 31-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 135424514 RSA 2005
Bench Pune
Appeal Number ITA 1354/PUN/2005
Duration Of Justice 5 year(s) 7 month(s) 29 day(s)
Appellant Venco Research & Breeding Farm Pvt., Pune
Respondent Addl. CIT,Range-7,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 31-01-2011
Assessment Year 2001-2002
Appeal Filed On 01-06-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 314 /PN/200 4 ( ASSTT. YEAR : 2000 - 01 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE - 7 PUNE .. APPELLANT V. VENCO R ESEARCH AND BREEDING FARM LTD. HOUSE S. NO. 114A/2 PUNE - SINHGAD ROAD PUNE 411030 PAN : NOT AVAILABLE . RESPONDENT ITA NO. 1354 /PN/200 5 ( ASSTT. YEAR : 2001 - 02) VENCO RESEARCH AND BREEDING FARM LTD. APPELLANT HOUSE S. NO. 114A/2 PU NE - SINHGAD ROAD PUNE 411030 PAN : NOT AVAILABLE V. COMMISSIONER OF INCOME - TAX APPEALS - I RESPONDENT PUNE A PPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI A BAY DAMLE ORDER PER I.C. SUDHIR JM IN THIS APPEAL THE REVENUE H AS QUESTIONED THE FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS : 1. THE CIT(A) HAS ERRED IN DIRECTING TO ALLOW DEPRECIATION ON THE POULTRY SHEDS AT HIGHER RATE APPLICABLE TO PLANT & MACHINERY. 2. THE CIT(A) ERRED IN PLACING RELIANCE UPON THE DECISION O F ITAT IN THE CASE OF VENKATESHWARA FARMS PVT LTD. PUNE WITHOUT TAKING NOTE OF THE FADT THAT IN THE CASE OF THE ASSESSEE FOLLOWING ASSETS HAVE BEEN CLASSIFIED SEPARATELY AS PLANT & MACHINERY & THE POULTRY SHEDS ON WHICH HIGHER DEPRECIATION HAS BEEN CLAIME D/ALLOWED CONSTITUTE BARE STRUCTURES/SHEDS WHICH ARE ENTITLED TO DEPRECIATION ONLY AT THE RATE APPLICABLE TO BUILDINGS. ITA NO 314 /PN/200 4 & 1354/PN/2005 VENCO RESEARCH & BREEDING FARM LTD. ASSTT . YEAR 2000 - 01 &2001 - 02 PAGE OF 6 2 I. THE POULTRY CAGES (INTEGRATED SYSTEM WITH COMMON FACILITIES FOR FEED WATER AND COLLECTGION OF EGGS) II. PIPELINES (FOR DRINKING WATER/WATE R SYSTEM) III. SLATS (FOR NO CONTACT WITH LITTER AND FOR GOOD VENTILATION) IV. ELECTRICAL FITTINGS (FOR LIGHT WARMTH AND HEAT) V. GAS BROODING (FOR ADDITIONAL HEAT FOR BABY CHICKS) VI. FOGGER SYSTEM (FOR COOLING EFFECT) 3. THE CIT(A) THUS FAILED TO TAKE NOTE OF THE DIS TINGUISHING FEATURE OF THIS CASE AS ALSO THE RATIO OF DECISION OF APEX COURT IN THE CASE OF ANAND THEATRES (244 ITR 192) AS PER WHICH PREMISES ARE NOT PLANT & EVEN BUILDING ESPECIALLY BUILT DOES NOT MAKE IT PLANT AND THERE IS WELL ESTABLISHED DISTINCTION B ETWEEN THE PREMISES IN WHICH THE BUSINESS IS CARRIED ON AND THE PLANT WITH WHICH THE BUSINESS IS CARRIED ON. 2. AT THE OUTSET OF HEARING THE LD. A.R. POINTED OUT THAT THE ISSUE RAISED IN THE GROUNDS AS TO WHETHER SHEDS ERECTED FOR POULTRY FARMING ARE P LANT OR NOT HAS ALREADY BEEN DECIDED BY PUNE BENCH OF THE TRIBUNAL IN THE CASE OF VENKATESHWARE FARMS (PVT.) LTD. V/S. DCIT 84 ITD 212 (PUNE). HE ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1) CIT V/S. SHIVALIK HATCHERIES (P) LTD. (2008) 9 DTR (H .P) 154 2) V.N. DUBEY V/S. CIT (2008) 10 DTR (M.P.) 175 3. THE LD. D.R. HOWEVER SUBMITTED THAT THERE ARE SEVERAL DECISIONS WHEREIN IT HAS BEEN HELD THAT THE BUILDING USED IN THE BUSINESS OF POULTRY FARMING CANNOT BE TREATED AS FACTORY BUILDING. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1) C.I.T V/S. HENLY FARM (2000) 160 CTR (BOM) 46 2) C.I.T V/S. SHIVALIK POULTRIES (2005) 274 ITR 529 (PUN & HAR.) 3) C.I.T V/S. VENKATESHWARE HATCHERIES (P) LTD. & OTHERS (1999) 237 ITR 174 (S.C) 4. THE LD. A.R . IN REJOINDER SUBMITTED THAT THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S. HENLY FARM (SUPRA) IS ON DIFFERENT ISSUE AS TO WHETHER BUILDING USED IN THE BUSINESS OF POULTRY FARMING CAN BE TREATED AS ITA NO 314 /PN/200 4 & 1354/PN/2005 VENCO RESEARCH & BREEDING FARM LTD. ASSTT . YEAR 2000 - 01 &2001 - 02 PAGE OF 6 3 FACTORY BUILDING. THE HONBLE BOMBAY HIGH COURT HELD THAT IT CANNOT BE TREATED AS FACTORY BUILDING WITHIN THE MEANING OF EXPRESSION IN ITEM I(3) OF THE TABLE IN PART I OF APPENDIX 1 TO I.T. RULES. THE LD. A.R. SUBMITTED FURTHER THAT IT IS NOW WELL ESTABLISHED PROPOSITION OF LAW THAT IN CA SE OF TWO VIEWS EXPRESSED BY HONBLE HIGH COURTS ON AN IDENTICAL ISSUE THE VIEW FAVOURABLE TO THE ASSESSEE WILL BE FOLLOWED AND APPLIED. IN SUPPORT HE CITED FOLLOWING DECISIONS : 1) K. SUBRAMANIAN ITO & ANOTHER 156 ITR 11 (BOM) 2) CIT V/S. PODAR CEMENT (P) LTD. ETC. 226 ITR 625(S.C) 3) CIT V/S. VEGETABLE PRODUCTS LTD. 88 ITR 192 (SC) 5. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS CITED WE FIND THAT THERE IS NO DISPUTE THAT THE SHEDS WERE BEING USED FOR REARING OF POULTR Y. THE A.O HOWEVER DID NOT ALLOW THE CLAIMED DEPRECIATION AT THE RATE OF 25%. THE SUBMISSION OF THE ASSESSEE IN THIS REGARD REMAINED THAT THESE SHEDS WERE SPECIFICALLY DESIGNED FOR REARING OF CHICKS AND IS IN THE NATURE OF PLANT AND NOT BUILDING. THE A.O REMAINED OF THE VIEW THAT THEY WERE IN THE NATURE OF COMMERCIAL BUILDING HAVING NO SPECIALIZED PURPOSE FOR WHICH THEY CAN BE TREATED AS PLANT AND MACHINERY. THE A.O ACCORDINGLY ALLOWED DEPRECIATION AS APPLICABLE TO THE BUILDING AND NOT AS PLANT AND MACHINERY. THE LD CIT(A) BEING AGREED WITH THE SUBMISSION OF THE ASSESSEE AND FOLLOWING THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF VENKATESHWARE FARMS PVT. LTD. V/S. DCIT ITA NO. 73/PN/1996 (A.Y. 1992 - 93) DT.24.5.2002 HAS DIRECTED THE A.O TO VERIFY THAT POULTRY SHEDS OF THE ASSESSEE ON WHICH DEPRECIATION AT THE RATE OF 25% HAS BEEN CLAIMED ARE HAVING SIMILAR SPECIAL FEATURES AS MENTIONED IN THE CASE OF VENKATESHWARE FARMS PVT. LTD. (SUPRA) AND IF THE FEATURES ARE SO THE ASSESSEE SHOULD BE ALLOWED DEPRECIATION ON THE POULTRY SHEDS AT THE RATE OF 25% OR ELSE AT 10%. THE REVENUE HAS QUESTIONED THIS ACTION OF THE LD CIT(A). 6. IN SUPPORT OF HIS ARGUMENT THE LD. D.R. HAD BASICALLY PLACED RELIANCE ON ASSESSMENT ORDER AND DECISIONS CITED ABOV E BY HIM. DECISION IN THE CASE OF CIT ITA NO 314 /PN/200 4 & 1354/PN/2005 VENCO RESEARCH & BREEDING FARM LTD. ASSTT . YEAR 2000 - 01 &2001 - 02 PAGE OF 6 4 V/S. HENLIY FARM (SUPRA) RELIED UPON BY THE LD. D.R IS OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT WHICH IS BINDING IN NATURE ON THE TRIBUNAL. IN THAT CASE THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD T HAT THE BUILDING USED IN THE BUSINESS OF POULTRY FARMING CANNOT BE TREATED AS FACTORY BUILDING WITHIN THE MEANING OF THAT EXPRESSION IN ITEM I ( 3 ) OF THE TABLE IN PART I OF THE APPENDIX 1 TO I.T. RULES. THE ISSUE RAISED IN THE GROUND HAS THUS BEEN ANSWER ED IN FAVOUR OF THE REVENUE. WE RESPECTFULLY FOLLOWING THE SAID DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT SET ASIDE THE FIRST APPELLATE ORDER IN THIS REGARD AND RESTORE THE ASSESSMENT ORDER ALLOWING DEPRECIATION AT THE RATE OF 10%. THE GROU NDS INVOLVING THE ISSUE ARE THUS ALLOWED IN FAVOUR OF REVENUE. 7. IN RESULT APPEAL IS ALLOWED. ITA NO. 1354/PN/2005 8. THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER MERELY ON THE GROUNDS THAT THE LD CIT(A) HAS ERRED IN : 1) CATEGORIZING PO ULTRY SHEDS AS BUILDING AS AGAINST PLANT; AND 2) TREATING EXPENSES ON FENCING AS CAPITAL EXPENDITURE AMOUNTING TO RS.584817/ - 9. SINCE THE ISSUE RAISED IN GROUND NO. 1 UNDER THE SIMILAR FACTS AND CIRCUMSTANCES HAS BEEN DECIDED HEREINABOVE IN ITA NO. 314/PN/2004 IN FAVOUR OF THE REVENUE. WE FOLLOWING THE SAME DECIDE THE ISSUE RAISED IN GROUND NO. 1 IN FAVOUR OF THE REVENUE. THE FIRST APPELLATE ORDER IN THIS REGARD IS THUS UPHELD. THE GROUND NO. 1 IS ACCORDINGLY REJECTED. GROUND NO. 2 10. WE FIND THAT THE ISSUE RAISED IN THIS GROUND AS CLAIMED BY LD. A.R. IS FULLY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ZENITH STEEL PIPES LTD. V/S. CIT (SUPRA) RELIED UPON BY THE LD. A.R. IN THAT CASE BEFORE THE ITA NO 314 /PN/200 4 & 1354/PN/2005 VENCO RESEARCH & BREEDING FARM LTD. ASSTT . YEAR 2000 - 01 &2001 - 02 PAGE OF 6 5 HONBLE JURISDICTION AL HIGH COURT THE QUESTION WAS AS TO WHETHER EXPENDITURE INCURRED IN ERECTING BARBED WIRE FENCE AROUND FACTORY PREMISES IS CAPITAL OR REVENUE EXPENDITURE. THE HONBLE HIGH COURT WAS PLEASED TO HOLD THAT THE WIRE FENCING CANNOT CERTAINLY LAST FOR MANY YEA RS. THE EXPENDITURE FACILITATED THE SMOOTH AND EFFICIENT RUNNING OF ITS BUSINESS BY THE ASSESSEE. THEREFORE HAVING REGARD TO THE NATURE OF EXPENDITURE AND THE PURPOSE FOR WHICH IT IS INCURRED THE EXPENDITURE WAS OF REVENUE NATURE AND THEREFORE DEDUCTIB LE. IN THE PRESENT CASE BEFORE US THE LD CIT(A) HAS TREATED EXPENSES ON FENCING AS CAPITAL EXPENDITURE WITH THIS OBSERVATION THAT IT IS NOT THE CASE OF THE ASSESSEE THAT THE FENCING WAS OF THE WIRE ONLY. THUS THE LD CIT(A) HAS TRIED TO DISTINGUISH THE FACTS OF THE PRESENT CASE WITH THAT IN THE CASE OF ZENITH STEEL PIPE LTD. V/S. CIT (SUPRA) . WE AGREE WITH THIS OBSERVATION OF LD CIT(A) AS EVEN BEOFRE US IT IS NOT MADE CLEAR AS TO WHETHER FENCING HAS BEEN DONE WITH WIRE ONLY OR IT IS OF TEMPORARY NATURE. WE THUS IN THE INTEREST OF JUSTICE SET ASIDE THE MATTER TO THE FILE OF THE A.O TO VERIFY THE CLAIM OF ASSESSEE IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ZENITH STEEL PIPES LTD V/S. CIT (SUPRA) AND ADJUDICATE THE ISS UE AFRESH ACCORDINGLY . IT IS NEEDLESS TO MENTION OVER HERE THAT A.O WILL AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHILE DECIDING THE ISSUE AFRESH AS PER THE SAID DECISION OF THE HONBLE BOMBAY HIGH COURT. THE GROUND NO. 2 IS THUS ALLOWED FOR ST ATISTICAL PURPOSES. 11. IN RESULT APPEAL IS PARTLY ALLOWED. 12. IN SUMMARY APPEAL PREFERRED BY REVENUE IS ALLOWED AND THAT PREFERRED BY THE ASSESSEE IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31ST JANUARY 2011 SD/ - SD/ - ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER ITA NO 314 /PN/200 4 & 1354/PN/2005 VENCO RESEARCH & BREEDING FARM LTD. ASSTT . YEAR 2000 - 01 &2001 - 02 PAGE OF 6 6 PUNE DATED THE 31 ST JANUARY 20 1 1 US COPY OF THE ORDER IS FORWARDED TO : 1. THE A PPELLANT 2. THE RESPONDENT 3. THE CIT - V/CIT - IV PUNE 4. CIT(A) - III PUNE 4 . THE D.R. A BENCH PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE